Korea Development Bank May Sell HMM Stake to POSCO
BusinessKorea reported that the state owned Korea Development Bank, which became the largest shareholder in container shipping line HMM, formerly
BusinessKorea reported that the state owned Korea Development Bank, which became the largest shareholder in container shipping line HMM, formerly known as Hyundai Merchant Marine, after its restructure in 2017, intends to sell its 12.6% stake to South Korean steel manufacturing giant POSCO. The report quoted a high ranking government official as saying that "KDB recently reported an HMM privatization plan to the Ministry of Strategy and Finance. The ministry will start a full-fledged review with other ministries and agencies."
Industry insiders believe that if POSCO absorbs HMM, it will create synergies in various fields. POSCO, Korea's largest steelmaker, ships about 160 million tons of raw materials and steel products annually. The volume of cargo handled by POSCO International, a general trading company, also amounts to tens of millions of tons a year. POSCO Chemical's imports of secondary battery materials (anode and cathode materials) are also on the rise. POSCO Group is fostering secondary battery materials as a future growth engine. The group’s total annual logistics costs amounted to six trillion won last year, accounting for 10 percent of its total sales.
If POSCO directly jumps into the shipping industry, it is expected to save POSCO trillions of won annually as the company will be able to integrate its affiliates’ logistics work. POSCO Group has strong financial power to do that. As of the end of the third quarter of 2020, POSCO's cash and cashable assets amounted to 6,769.1 billion won. This means that POSCO can afford to pay between 1 trillion won and 1.5 trillion won to buy HMM.