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Hapag-Lloyd Explores Bid for Majority Stake in HMM, Setting the Stage for a High-Stakes Battle

Image: HMM

Reports from both Korean and German media sources indicate that Hapag-Lloyd, the fifth-largest ocean carrier globally, is contemplating a bold move by entering the race to acquire a controlling interest in South Korean rival Hyundai Merchant Marine (HMM). This potential acquisition could significantly reshape the maritime industry’s landscape, adding an intriguing twist to the ongoing developments.

HMM, the last remaining major container carrier from South Korea, finds itself in the midst of a pivotal moment. A substantial stake is up for grabs, currently held by the state policy bank KDB and Korea Ocean Business Corporation (KOBC), a government-chartered maritime finance entity. These two entities emerged as major stakeholders in HMM through a government bailout strategy that was initiated in the wake of Hanjin Shipping’s sudden collapse in 2016. This move granted them a collective stake of approximately 75 percent in HMM, and now they are putting up for sale about 58 percent of it.

While Hapag-Lloyd has officially acknowledged its consideration of potential acquisitions, it’s not the only contender in this high-stakes contest. As of now, five Korean entities have thrown their hats into the ring: SM Group, the owner of smaller carrier SM Line; Harim, a prominent investor in the bulker firm Pan Ocean; logistics companies LX Holdings and Dongwon Group; and Global Sae-A, an exporter of consumer goods.

For the Korean shipping industry, the possibility of a foreign entity acquiring HMM is both a significant and politically sensitive development. The government’s strategic goal is to safeguard local private enterprises’ access to reliable transportation. In the throes of the late-pandemic cargo surge, HMM and the Korean Ministry of Small and Medium-sized Enterprises (SMEs) struck an agreement. This arrangement ensured dedicated space for smaller Korean businesses, guaranteeing their continued access to container slots within a highly competitive freight market. Moreover, HMM’s collaboration with the government’s postal service, Korea Post, facilitated a door-to-door export service catering to small and medium Korean businesses.

Intriguingly, SM Group’s Chairman Woo Oh-hyun has publicly expressed his dedication to purchasing and enhancing HMM for the betterment of South Korea. In his own words, “Considering my age of 72, I have decided to buy HMM as my last mission — to reinvigorate our nation’s shipping industry by making us Asia’s No.1 shipping company,” as he shared with Korea Economic Daily.

The stage is set for a complex and captivating showdown as these industry giants vie for control over HMM. The outcome of this battle could shape the future of Korean shipping and potentially reverberate throughout the global maritime community.

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