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Hapag-Lloyd is considering the acquisition of Korean shipping company HMM
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This is after reportedly requesting Information Memorandum from Samsung Securities, the lead manager for the sale of HMM
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An IM is provided prior to selling a business and functions as a “pitch” to prospective buyers
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The sale price could reach $3.74 billion
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If the acquisition bid is successful, the German container line will expand further its container business in the Asian region
German container line Hapag-Lloyd may be considering the acquisition of Hyundai Merchant Marine (HMM), South Korea’s leading shipping company.
This, after Hapag-Lloyd reportedly requested an Information Memorandum (IM) from Samsung Securities, the lead manager for the sale of HMM. An IM is provided prior to selling a business and functions as a “pitch” to prospective buyers.
The sale comprises the complete stake in HMM owned by the Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC).
KDB holds a 20.69% stake and KOBC a 19.96% stake with a combined value of 1 trillion Korean won (US$746.55 million) as well as 2.7 trillion won convertible bonds. In total, the estimated price may reach $3.74 billion.
There is keen interest in whether overseas companies can acquire HMM, which is essentially the only remaining national flag carrier of South Korea.
The entry of Hapag-Lloyd with extensive financial capability in the acquisition bid is a major factor compared to domestic mid-sized groups, such as Harim, Dongwon and LX, who are also known to have entered the bid.
SM Group, the first to show interest in the acquisition, is rumored to be at risk of dropping out of the acquisition process, while Harim, Dongwon, and LX Group are still contemplating aspects like pricing as of this writing.
These companies have also shown interest in the possibility of dividends from HMM’s nearly 15 trillion won in cash reserves.
KDB will likely impose restrictions on agreements between shareholders during the acquisition process, potentially affecting possibilities such as dividend distribution.
Goldman Sachs was tapped as the advisory firm of Hapag-Lloyd for consideration of the acquisition price and potential business synergies.
If the acquisition bid pushes through, Hapag-Lloyd can expand its presence in the Asian region within the container business and accelerate to be among the top three in the world.
Hapag-Lloyd and HMM are both members of the “The Alliance” consortium of shipping lines, making their merger a relatively easy affair.
Hapag-Lloyd has been bolstering its presence on routes between Asia and the Mediterranean, as well as the trans-Pacific routes between Asia and the eastern coast of the United States, by adding more ships, giving them leverage on the routes between Asia and Europe as well as the Americas.
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