SK Shipping Sale Collapses, HMM Loses Preferred Bidder Status
Hahn & Company Ends HMM's Bid for SK Shipping
Hahn & Company, the majority stakeholder in SK Shipping, has officially terminated HMM’s status as the preferred negotiator for the sale of the shipping company’s management rights. This decision comes just six months after HMM was selected for the role, highlighting significant disagreements over pricing and acquisition terms. Hahn & Company is now poised to explore negotiations with other potential buyers, both domestic and international.
Negotiation Breakdown and Market Valuation
As of August 1, investment banking sources revealed that Hahn & Company has decided to halt negotiations with HMM regarding the management rights of SK Shipping. HMM was initially chosen as the preferred bidder in January, which allowed them exclusive access to due diligence and price discussions. However, negotiations faced challenges from the outset due to a substantial gap in the valuation expectations of both parties.
The market has estimated SK Shipping’s total value at approximately 4 trillion won. In contrast, HMM aimed to acquire specific business units, including crude oil carriers and liquefied petroleum gas (LPG) carriers, while excluding the liquefied natural gas (LNG) segment. HMM sought to negotiate a lower acquisition price, reportedly willing to invest no more than 2 trillion won. This disparity in valuation and expectations led to a stalemate in discussions.
Industry insiders noted that the differences extended beyond price, encompassing various conditions related to the acquisition and personnel matters. Hahn & Company is likely to revise its strategy, potentially opting to sell SK Shipping’s vessels individually or bundle certain business units for sale. Analysts believe that SK Shipping’s business competitiveness has improved significantly since Hahn & Company acquired it in 2018, bolstered by long-term contracts with reputable shippers.
Impact on HMM and Future Prospects for SK Shipping
HMM’s unsuccessful bid for SK Shipping is expected to have long-term implications for the company’s investment strategies. Last September, HMM announced plans to invest 23.5 trillion won in new ventures by 2030, aiming to diversify its business portfolio beyond container shipping. The company has been actively seeking mergers and acquisitions in the bulk carrier and crude oil sectors to mitigate risks associated with market fluctuations.
Meanwhile, Hahn & Company is set to reopen negotiations with various shipping companies and investors for the sale of SK Shipping. The company has been offloading LNG carriers and very large crude carriers (VLCCs) to international buyers, especially as charter contracts with major shippers like Korea Gas Corp. expired last year. An insider from the investment banking sector indicated that Hahn & Company believes it can achieve a higher return on investment by selling reorganized vessels and business units separately, rather than accepting HMM’s offer.
