Harim Group Drops HMM Acquisition Deal Over Seller’s Management Rights Demand

Harim Group, the agricultural food processing company, has given up the deal to acquire the HMM container transportation and shipping group. The firm said this resulted in a failed $4.9 billion acquisition as the parties did not agree to finalize the contract.

What Led to the Failed Negotiation

As per The Korea Economic Daily, Harim revealed it decided to drop its HMM acquisition bid due to a demand it cannot accept. It was explained that the seller wants to retain its management rights on HMM, allowing it to have a say on how the business is operated and others.

Harim rejected this demand and could not resolve its differences with the Korea Development Bank (KDB) and the Korea Ocean Business Corp. (KOB). They cannot agree on a 3-year lock-up demand for perpetual bonds, prohibiting KOB and KDB from converting the KRW1.68 trillion bonds in HMM into equities for three years.

"It was a tough negotiation with the seller, composed of a state-run bank and a state-run company," an official of the Harim Group told The Korea Economic Daily. "No company will likely accept a deal, where the buyer is given the largest shareholder position without the guarantee of exercising actual management rights."

In December 2023, a consortium consisting of Harim and JKL Partners was selected as the preferred buyer of HMM Co. The sale involves a 57.9% stake in the shipping giant.

Back to Square One

With the deal's collapse, HMM is back to square one, which means it has to start over and find a new buyer. The shipping company will now remain under a creditors' management system. Yonhap News Agency reported that the Korea Development Bank and Haejin Engineering & Construction are expected to pick a suitable date to put HMM up for sale again.

"It is still difficult to talk about when the resale process will begin again," a KDB official commented.

Photo by: Harim Holdings Website