As the contest to take over HMM intensifies, SM Group, parent of the South Korean flagship carrier’s compatriot peer SM Line, has bought more HMM shares to increase its stake.
Sources in the stock market stated that one of SM Group’s subsidiaries, Dong Ah Construction, had purchased 500,000 HMM shares for KRW10 billion.
SM Line and its affiliates now hold 6.66% of HMM, up from 6.56% last month. The SM group began buying HMM shares in January 2022, but had denied any intention of taking over the company, until recently.
On 19 July, SM Group’s founding chairman Woo Oh-hyun disclosed his plan to acquire HMM in a media interview, one day before HMM’s largest shareholders Korea Development Bank and Korea Ocean Business Corporation formally invited tenders for a combined 57.87% stake in the company. Interested parties have until 21 August to submit bids.
HMM came under state support after swapping debt for equity in 2016. In 2022, after HMM recorded two years of record profits, KDB’s then-chairman Lee Dong-gull said it was time for the company to be relieved of state control.
The SM group is cementing its status as HMM’s third largest shareholder, behind KDB and KOBC. As of now, KDB and KOBC have respective stakes of 20.69% and 19.96%. However, they plan to exchange some 37% of convertible bonds for additional HMM shares as part of the disposal of their majority stake.
The Korea Economic Daily, citing sources, said that the SM Group’s continuous purchases of HMM shares may be designed to support the company’s stock price to preserve its corporate value. Particularly, it has become challenging to find buyers for shipping companies amid a market downturn. Recently, attempts to find buyers for compatriot dry bulk shipping business Polaris Shipping and Hyundai LNG Shipping (HMM’s former LNG shipping unit) have stalled due to lacklustre interest.