HMM Co., South Korea's leading ocean carrier, is in the process of acquiring SK Shipping Co., excluding its liquefied natural gas (LNG) transportation operations.
Investment banking sources reported on Thursday that the deal is estimated at 2 trillion won ($1.4 billion). Currently undergoing due diligence, HMM is evaluating the purchase of SK Shipping’s tanker, liquefied petroleum gas (LPG) carrier, bulk cargo, and other business segments from Hahn & Co., SK Shipping’s primary shareholder, according to industry insiders. Morgan Stanley is overseeing the sale.
A previous agreement from 2014, when HMM divested its LNG tanker service, restricts HMM from re-entering the LNG transportation market until 2029. This clause is expected to exclude SK Shipping’s LNG division from the current acquisition.
HMM aims to finalize its due diligence within the coming month and present the acquisition proposal to its board of directors as early as April.
SK Shipping, recognized as South Korea's top tanker and dry bulker operator, is noted for its stable revenue structure within the local shipping industry. Hahn & Co. acquired an 83.65% stake in SK Shipping from SK Group in 2018 for 1.5 trillion won. Currently, Hahn & Co. holds a 71.43% stake via Hahn & Co. Tanker Holdings Limited, with SK Corp. retaining a 16.35% stake.
While Hahn & Co. is reportedly seeking a valuation of approximately 4 trillion won for SK Shipping’s complete operations, including LNG, HMM considers a valuation closer to 2 trillion won for the non-LNG assets to be more appropriate. This valuation difference is anticipated to be a key point of negotiation.
SK Shipping reported sales of 1.8865 trillion won and an operating profit of 367.1 billion won in 2023. HMM's financial results for 2024 show sales of 11.7002 trillion won and an operating profit of 3.5128 trillion won, highlighting its capacity for significant acquisitions.
HMM is the largest container shipping company in South Korea and a major global carrier, offering a comprehensive network of services across major trade routes.
SK Shipping is a South Korean shipping company specializing in the transportation of crude oil, LPG, and bulk cargo.
Hahn & Co. is a South Korean private equity firm focused on buyouts and control investments across various industries, including a significant presence in portfolio companies within South Korea.