[Reporter’s Notebook] The 'HMM-sla' Sale Roadmap Needs Meticulous Design

The sale process for HMM, the No. 1 domestic and 8th largest global container shipping company, has officially begun. HMM is a 'painful finger' that was revived with an astronomical public fund injection of 7.4 trillion KRW. After recovering its strength due to the shipping boom following COVID-19, HMM has finally emerged as a major player in the mergers and acquisitions (M&A) market.

However, the sale of HMM is a delicate task that requires catching two rabbits at once. The public funds invested so far must be fully recovered by selling quickly when the company's value is high. Also, since it is a company with significant industrial influence, it must be handed over to a buyer with a clear growth roadmap post-acquisition.

HMM has alternated between the worst dark ages and the best boom periods in the shipping industry. After the 2008 global financial crisis, European major carriers like Maersk and MSC increased their vessel sizes, starting a freight rate 'chicken game,' and HMM entered a long-term deficit state from 2011. Its competitor, Hanjin Shipping, could not endure the 'chicken game' and went bankrupt in August 2016. With Hanjin Shipping's bankruptcy, HMM effectively became the only national deep-sea shipping company and a key national industry.

Despite going through the worst recession, HMM barely survived with policy fund support. To recover the large-scale public funds invested during this process, the Korea Development Bank has been weighing the timing of the sale, and an opportunity arose with the shipping boom after COVID-19. HMM's stock price also skyrocketed explosively after 2021 due to the COVID-19 special demand and performance recovery. HMM's stock price, which was in the 2,000 KRW range in 2020, exceeded 50,000 KRW at its peak in 2021. At that time, HMM's nickname was 'HMM-sla.'

However, the problem is that the valuation is too high. The acquisition price mentioned in the industry is around 5 trillion KRW, with figures up to 8 trillion KRW also being discussed. As a key national industry, domestic companies or capital should step forward, but there are not many places that can handle such a large amount of money. This is why large corporations like Hyundai Motor, HD Hyundai, and POSCO have been mentioned as acquisition candidates. However, when the acquisition battle actually opened, it turned into a five-way competition among mid-sized groups. So far, five mid-sized groups?LX, Harim, Dongwon, SM Group, and Global Sea?have entered the bidding. In particular, SM Group, which already holds a 6.56% stake in HMM, and Harim Group, which formed a consortium with private equity fund JKL Partners, are showing strong acquisition intentions.

The acquisition candidates are all on a similar level, but HMM's valuation is not easy, and recently the shipping industry cycle has worsened again. The sale process could drift once more. Therefore, it is even more necessary for the government, capital, and industry to cooperate and meticulously design the future of 'HMM-sla.'