SK Shipping, LNG Excluded from Sale... HMM Selected as Preferred Negotiator
by Lee Minwoo
Published 20 Feb.2025 16:22(KST)
Updated 21 Feb.2025 08:39(KST)
Negotiations on Acquisition Price and Method to Follow Due Diligence in March
Key Issue: HMM's Non-Compete Clause in LNG Business
Han & Company has selected HMM as the preferred bidder for the acquisition of SK Shipping's management rights. Since there were few potential buyers with sufficient capacity other than HMM, this is seen as an expected step. However, there are prospects that it may be difficult for HMM to acquire all business units of SK Shipping, as HMM had restrictions on competition when it previously divested its LNG business.
According to the investment banking (IB) industry on the 20th, Han & Company and the sales advisor Morgan Stanley recently selected HMM as the preferred negotiation partner and are currently in talks. HMM plans to conduct due diligence by next month.
Han & Company wants to sell all major businesses of SK Shipping as a whole. The asking price is known to be in the 4 trillion KRW range. Meanwhile, Han & Company acquired SK Shipping in 2018 for about 1.5 trillion KRW. However, HMM is reportedly negotiating with an estimated fair price in the 2 trillion KRW range. SK Shipping recorded sales of 1.8865 trillion KRW and operating profit of 367.1 billion KRW in 2023.
Another reason why it is difficult to receive the full valuation of around 4 trillion KRW is that when HMM sold its LNG business unit during the Hyundai Merchant Marine era to IMM Private Equity, a non-compete clause was attached, prohibiting entry into the business until 2029. Therefore, HMM may prefer to acquire only the tanker and LPG business units. However, in this case, Han & Company would have to sell the LNG business separately, which would be a burden.
Both parties are expected to conduct final negotiations on the acquisition method and price after due diligence is completed. Recently, with maritime freight rates soaring, HMM has achieved record-breaking performance, so it is well-funded. HMM posted sales of 11.7002 trillion KRW and operating profit of 3.5129 trillion KRW last year alone. Operating profit increased by a remarkable 500.7% compared to the previous year.
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