Dongwon founder vows to acquire Korea’s top container line HMM

Dongwon Group, South Korea’s leading seafood and logistics conglomerate, has vowed to acquire HMM Co., the country’s top container ship operator, up for sale.

“Acquiring HMM is the last dream of my life,” Kim Jae-chul, founder and honorary chairman of the group, told reporters on the sidelines of a ceremony at Hanyang University where he received an honorary doctorate in engineering on Tuesday.

“As a company that has been running its business at sea for a lifetime, Dongwon can run HMM better than anyone else."

His comments mark the first time that the 88-year-old Dongwon leader has publicly expressed his determination to acquire HMM.

HMM’s sellers – state-run Korea Development Bank (KDB) and Korea Ocean Business Co. (KOBC) – picked Dongwon Industries Co., Harim Co. and LX Group as the main three bidders for the container line in mid-August.

The three bidders are said to be willing to pay at least 5 trillion won ($3.8 billion) for HMM, sources said.

To raise its chance of winning the bid, Dongwon has hired Samjong KPMG and Bain & Company as its advisers. It has also recruited Park Ki-hoon, former chief executive of SM Line Corp. Park once worked for Hyundai Merchant Marine, the predecessor of HMM.

TO RAISE FUNDS FOR ACQUISITION

Dongwon, Korea’s top canned tuna producer, plans to fund the acquisition with its own capital. It is considering selling stakes in affiliates in a block deal or securitizing assets for the deal financing, sources said.

The company is also considering listing Starkist Co., its US-based canned tuna affiliate, to raise funds.

If Dongwon acquires HMM, it expects synergy with its port facilities. The company runs a port in Korea’s largest port city Busan and plans to have another smart port at the New Busan Port next year.

HMM was taken over by KDB in 2016 after the company accumulated huge losses amid an industry slowdown.

State-run KDB, HMM’s largest shareholder and top creditor, has been exploring the sale of its stake in the container ship carrier to recover taxpayer money it injected into the company.

The stake up for sale is 40.65% of HMM. But it could swell to 58% if creditors KDB and KOBC convert their 1 trillion won worth of permanent HMM bonds into shares.

Write to Jong-Kwan Park at pjk@hankyung.com

In-Soo Nam edited this article.