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Harim Withdraws from $5 Billion Bid for HMM Over Management Rights Issue

Dispute Over Control Rights Derails Major Acquisition in South Korea's Shipping Sector
South Korea
h 003380.KQ h 011200.KO Mid and Small Cap 2000
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In a significant development within South Korea’s shipping and finance sectors, Harim Co., a leading poultry processor, has abandoned its ambitious $5 billion deal to acquire HMM Co., the country’s top ocean carrier. The breakdown in negotiations stemmed from a disagreement over management control post-acquisition, with the seller and state-run institutions Korea Development Bank (KDB) and Korea Ocean Business Corp. (KOB) insisting on retaining a degree of control over HMM’s management.

The deal’s collapse was confirmed after Harim and its consortium partner, JKL Partners, failed to reconcile differences with KDB and KOB, particularly over a three-year lock-up period demand for JKL Partners. The deadlock centered on the consortium’s reluctance to accept a deal that would not guarantee them actual management rights despite becoming the largest shareholder.

This impasse marks a setback for the Harim consortium, which had been selected as the preferred buyer for a 57.9% stake in HMM, outbidding Dongwon Group by approximately 200 billion won. The withdrawal signals a return to the drawing board for the sale of HMM, with KDB and KOB remaining its largest shareholders and creditors.

The dispute also highlights the challenges of restructuring within South Korea’s shipping industry, currently experiencing a slump. With HMM’s sale process now uncertain, industry observers are watching closely to see how the state-owned bodies will navigate the divestiture amidst a challenging business environment and increased competition from global shipping alliances.

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