'The Shrimp That Swallowed the Whale'... Harim Chairman Kim Hong-guk's 'Gambler Management'

Harim Group Selected as Preferred Negotiation Partner for HMM Acquisition
Bold M&A Moves to Become a Comprehensive Logistics Company

Harim Group has drawn attention for Chairman Kim Hong-guk's 'gambler management' style after being selected as the preferred bidder to acquire HMM (formerly Hyundai Merchant Marine), the only domestic deep-sea container shipping company. Starting with a meat processing business centered on chicken, the group has expanded its size through bold mergers and acquisitions (M&A) with large-scale industries, continuing its relentless march toward the long-cherished goal of becoming a 'comprehensive logistics company.'

According to industry sources on the 19th, Chairman Kim showed exceptional determination in the HMM acquisition battle. It is reported that he ordered a bold bet after repeated discussions with the group's top executives until just before the main bid deadline on the 23rd of last month. As a result, Harim Group offered a hoped-for acquisition price of about 6.4 trillion won, approximately 200 billion won more than its competitor Dongwon Group, earning higher scores in the quantitative evaluation.

Chairman Kim Hong-guk of Harim Group [Photo by Yonhap News]

In a press release on the same day, Harim Group expressed its ambition, stating, "If negotiations are successfully concluded and the main contract is signed, we will enhance global competitiveness through synergy with Pan Ocean, a bulk specialist shipping company, and develop HMM into a trusted national shipping company."

Pan Ocean is the largest domestic bulk shipping company acquired by Harim Group in 2015. It participated in the main bid as the acquisition entity for HMM in a consortium with JKL Partners. HMM, which Harim Group aims to acquire, has assets worth 25.8 trillion won, ranking 19th in the business world according to the Fair Trade Commission's statistics. It is larger than Harim Group, which ranks 27th with assets of 17 trillion won. This is why the industry describes the situation as 'the shrimp swallowing the whale.' If the Harim Group-JKL Partners consortium acquires HMM, the combined asset size will increase to 42.8 trillion won, jumping to 13th place in the business world rankings.

Previously, when Harim Group acquired a 58% stake in Pan Ocean for 1.008 trillion won, Chairman Kim's gambler spirit was also activated. In a situation where most of the raw materials for poultry feed depend on imports, he saw that acquiring Pan Ocean, which has bulk shipping infrastructure to transport grains, would reduce transportation costs and stabilize the distribution network, prompting him to enter the acquisition battle.

He also presented a vision to become the 'Korean version of Cargill,' a global grain distribution company that is the world's number one grain company and stands out in the distribution sector. Although there were concerns about the 'winner's curse' that the company might face difficulties due to the over 1 trillion won investment at the time of acquiring the stake, eight years later, this has been proven unfounded by performance. As of the first half of this year, Pan Ocean operates 301 bulk carriers, transporting 100 million tons of cargo annually worldwide. Harim Holdings' transportation division recorded an operating profit of 318.4 billion won as of the third quarter this year, accounting for 57.72% of the holding company's total.

Hongkuk Kim, Chairman of Harim Group

Chairman Kim is a self-made CEO who built the foundation of his business by raising and selling 10 chicks bought by his maternal grandmother when he was 11 years old, and grew Harim into the number one group in the domestic meat processing industry. Even before strengthening the distribution base through the acquisition of Pan Ocean, he led M&As in the feed and food processing sectors to grow the company. In 2001, he acquired Jeil Feed, followed by pork processing company Seonjin in 2007, and Farmsco, the livestock breeding and processing division of Daesang Group, in 2008. If Harim Group embraces container shipping company HMM this time, it can leap forward as a comprehensive logistics company encompassing livestock, feed, food processing, and distribution.

Harim Group stated, "HMM and Pan Ocean can form an ideal portfolio with container, bulk, and special vessels, and with the market supply-demand and price fluctuation response capabilities accumulated by both companies, we can overcome any global shipping market downturn. Holding the status of preferred bidder, we will do our best to complete the remaining procedures through sincere negotiations with the seller and sign the main contract."