POSCO eyes KDB’s $5 bn stake in HMM to enter shipping industry
SEOUL : POSCO Group, South Korea’s largest steel and energy raw materials trader, has embarked on the process to acquire a controlling stake, worth around 7 trillion won ($5 billion), in HMM Co., the country’s top ocean carrier, in a bid to enter the shipping industry and secure a new growth engine, according to investment banking sources on Thursday.
POSCO Holdings Inc. began studying HMM as an acquisition target in late 2024. It recently signed advisory contracts with Samil PwC and Boston Consulting Group, as well as a law firm, to assess HMM’s business, said people with knowledge of the matter.
POSCO is now drawing up detailed plans to buy control of the container shipping company.
HMM, with a market value of 23 trillion won, is majority owned by the Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC).
The steel giant is targeting HMM shares held by KDB, equivalent to a 36.02% stake of its outstanding shares, in a strategic move to shield itself from logistics disruptions arising from US tariff hikes, said the sources.
The state-run bank’s stake in the shipping company is expected to fall to the low-30% range after HMM’s share buyback this month.
“We are currently evaluating whether (the acquisition of HMM) would generate synergy with our group’s existing businesses. At this stage, no decision has been made regarding a potential bid,” said a POSCO official.
KDB and KOBC have sought to divest HMM to recoup taxpayer money. They rescued the company, formerly Hyundai Merchant Marine Co., from bankruptcy with a public fund injection in 2016 during a shipping industry downturn.
However, their attempt to offload HMM fell apart in early 2024 after Harim Co., the country’s leading poultry processor and then the preferred buyer, walked away from a $5 billion deal to buy a 57.9% stake in HMM in a consortium with Seoul-based JKL Partners.
A key reason for the deal’s collapse was the conditions attached: the sellers sought to retain a say in HMM management after the transaction, a demand Harim rejected.
JOINT MANAGEMENT
POSCO is considering jointly managing HMM with KOBC, the second-largest shareholder currently with a 35.67% stake, according to the sources.
With KOBC unwilling to divest its 35.7% stake in HMM in the near future, POSCO has no plans to acquire shares from the state-run body given its financial burden, said people familiar with the situation.