HMM conducts due diligence to acquire SK Shipping

SK Shipping's SK Spica (Source: SK Shipping)

South Korean private equity fund Hahn & Co. has selected HMM, the national shipping company, as the preferred bidder in the sale of a majority stake in SK Shipping.

HMM will conduct due diligence on the company by the middle of next month. However, the deal is facing a major hurdle. When HMM sold its LNG business to IMM Private Equity in 2014, the contract included a 15-year non-compete clause. In the past, HMM has tried to buy back the old LNG business from IMM several times but was unsuccessful.

The difference between HMM’s offer for SK Shipping and Hahn & Co’s expected price suggests HMM is ready to give up on the LNG carrier business at this point. According to local media, HMM is offering KRW2 trillion ($1.4 billion) to buy Hahn’s 71.43% stake in SK Shipping. Hahn & Co previously valued SK Shipping at double that amount.

According to Equasis, SK Shipping currently owns 62 vessels, including:

• 14 LNG carriers
• 14 LPG carriers
• 20 crude oil carriers
• 6 product carriers
• 7 bulk carriers

In September last year, HMM announced an expansion plan through 2030, with a budget of KRW23.5 trillion ($17.48 billion) to double the size of its container fleet and triple its tanker & bulk carrier fleet. Of this, 5.6 trillion KRW will be spent on developing the fleet of bulk carriers and tankers, increasing the total number of ships from 36 to 110, with a total tonnage of 12.56 million DWT.

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Source: Phaata.com (According to Splash247)

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