[Photo by Lee Chung-woo]
A weeks-long attempt by Harim Holdings to take over HMM Co. has been called off, with Harim saying on Wednesday that its talks to buy South Korea’s largest container shipper collapsed.
Harim, a once-preferred bidder in the takeover worth 6.4 trillion won ($4.8 billion), could not reach a final agreement with the shipper’s creditors after weeks of talks on several issues, including management rights.
The setback will compel HMM to explore alternative bidders but given the tug-of-war that has evolved between the previous bidder and the creditors, the deal’s future looks murky.
The impasse arose when Harim made several demands, including an exemption for JKL Partners from a three-year stock holding requirement, which the creditors rejected. JKL Partners, a private equity firm, is part of the consortium formed by Harim Holdings for the acquisition.
The carrier’s major shareholders, Korea Development Bank (KDB) and Korea Ocean Business Corp. (KOBC), insisted on retaining management rights as a “legal safeguard” to ensure legitimate business practices because Harim was supposed to finance the bulk of the funds required to take over HMM via a capital increase or private equity investment.
In response to the creditor’s claim on management rights, “no bidder would accept it to become the largest shareholder of a company without actual management rights to exercise,” according to Harim.
The claim makes sense by and large as KDB, one of the creditors and a state-run bank, injected nearly 7 trillion won of public funds into purchasing HMM.
But some critics say the claim may be intended to keep the carrier as a state-owned entity under KOBC’s control. KOBC is a state-owned creditor, and this could be an obstacle to potential bidders from buying the country’s biggest bulk container carrier.
HMM is a bulk carrier that has been the cornerstone of the country’s shipping and logistics industry. All the stakeholders must do their best to seek new bidders with robust balance sheets and revive the deal as soon as possible.
By Editorial Team
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]