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| Korea Development Bank Chairman Lee Dong-gull speaks during a press conference at its headquarters in Seoul on June 14. Yonhap |
By Lee Min-hyung
The Korea Development Bank (KDB) is approaching an unspecified conglomerate here for the sale of Hyundai Merchant Marine (HMM). The state-run lender is seeking to clinch a mega deal with a top-tier conglomerate to ensure the smooth privatization of the firm which plays a key role in the global shipbuilding industry.
KDB Chairman Lee Dong-gull confirmed last week the bank's plan to convert HMM convertible bonds worth 300 billion won ($263.7 million) into stocks. This will give KDB a 24.99 percent stake in the company.
Lee cleared away any expectations surrounding which firms will take over the company.
"No companies have contacted us to take over HMM," he told reporters during a recent press conference. "We are going to comprehensively review details (over the sale of HMM) with relevant authorities."
But the industry expects one of the largest conglomerates in Korea to acquire the management rights to HMM by signing a deal with the KDB. Early this year, HMM was estimated to be worth as much as 1.5 trillion won, but its valuation has doubled recently to around 3 trillion won on its sharp stock growth.
For now, POSCO, Hyundai Motor Group and Korea Shipbuilding and Marine Engineering (KSME) are cited as potential candidates to take over HMM, as they can cut massive logistics costs and synergize their businesses by acquiring the shipping service provider.
"Only a few conglomerates will be able to express sincere interest in taking over the company due to the high valuation," an industry source said. "Even if HMM's recent stock price surge comes as a burden for potential buyers, a big deal with a conglomerate is the most probable scenario for privatization of HMM from the viewpoint of KDB."
The head of the state-run lender also prefers to finalize a deal with a big firm when carrying out restructuring of companies in basic industries ― such as aviation or shipping.
In January 2019, KDB announced its decision to sell its controlling stake in Daewoo Shipping & Marine Engineering (DSME) to Hyundai Heavy Industries. Last year, KDB also played a mediating role in helping HDC Hyundai Development Company contact Asiana Airlines for the acquisition of the cash-strapped airline, which ended up in failure.
"The sale of HMM should be carried out in stages after taking various factors into account, so we are going to take more time and conduct reviews," Lee said.
