South Korean shipping giant HMM is set to expand its fleet through a partial acquisition of SK Shipping Co., currently owned by private equity firm Hahn & Company. The deal’s structure faces potential hurdles due to a previous non-compete agreement in the LNG sector.
Morgan Stanley, which is managing the sale, will conduct due diligence until mid-March. SK Shipping’s assets include 22 crude oil carriers, 12 LNG vessels, 14 LPG carriers, 10 bulk carriers, seven bunkering vessels, and one product tanker as of September 2023.
Hahn & Company acquired SK Shipping in 2018 for approximately 1.5 trillion won ($1.1 billion), streamlining operations by divesting non-core businesses and aging vessels. The company reported revenue of 1.89 trillion won ($1.42 billion) and operating profit of 367.1 billion won ($276 million) in 2023.
The transaction could be complicated by HMM’s historical agreement with IMM Private Equity, which includes a non-compete clause in the LNG sector. This stems from when HMM’s predecessor, Hyundai Merchant Marine, sold its LNG business to IMM. Should HMM proceed with acquiring only the tanker and LPG operations, Hahn & Company might face challenges in separately selling the LNG fleet later.
The deal represents continued consolidation in the global shipping industry as carriers seek to strengthen their positions across various maritime segments. Neither party has disclosed the potential transaction value.
