Harim x HMM, How a ₩6.4T Deal Collapsed in Seven Weeks Over a Perpetual Convertible
Dec 18, 2023, Harim-JKL consortium named preferred bidder at ~₩6.4T · Feb 6, 2024, SPA negotiation terminated · ₩1.7T perpetual convertible treatment, five-year non-intervention covenant, and dividend cap as the deciding terms
Background
HMM is the last remaining Korean national-flag container carrier. After Hanjin Shipping's 2016 collapse and its own parent Hyundai Group's liquidity crisis, the company entered a creditor-led workout in 2016 and survived only through repeated rounds of debt-for-equity conversion, perpetual convertible bond purchases by state creditors, and fresh capital injections led by Korea Development Bank. In April 2020 it was renamed from Hyundai Merchant Marine to HMM. By 2023 it ranked ninth globally by container capacity and was Korea's only meaningful long-haul container carrier.
Two layers of state ownership: ~40% common plus ₩1.7T perpetual convertibles.
At the time of the 2023 sale launch, KDB held roughly 20% and KOBC held roughly 20% of HMM common, a combined ~40% government stake. On top of that, the same two institutions held approximately ₩1.7 trillion of perpetual convertible bonds (CBs), instruments with no maturity that are accounted for as equity but convert into HMM common at very low strike prices. If fully converted, KDB and KOBC could push their combined ownership above 70%. The treatment of these perpetuals turned out to matter more than the headline price in this transaction.
A cash pile of ~₩12T from the 2021-2022 container boom.
During the COVID-era container freight boom, HMM earned more than ₩10T in cumulative operating profit across 2021 and 2022. By 1Q 2023, its cash and equivalents stood at roughly ₩12 trillion, an unusually high cash-to-market-cap ratio. That cash made HMM attractive as a target, but it also made the sellers, KDB and KOBC, nervous about how a private acquirer might use it after closing. This single fact drove their later insistence on a dividend cap and a five-year non-intervention covenant.
The 2023 sale process and the December 18 award.
KDB and KOBC launched the sale process in May 2023, putting their ~40% combined stake on the block. Bidders included the Harim Group and JKL Partners consortium, Dongwon Group, and early-stage interest from LX International. Initial market expectations clustered between ₩5T and ₩8T. On December 18, 2023, the sellers selected Harim and JKL as preferred bidder at approximately ₩6.4 trillion, for a structure that would convey approximately 57.9% of HMM (combining the sellers' common stake with an assumed partial conversion of the perpetuals at closing).
Feb 6, 2024, SPA negotiation terminated.
Seven weeks of intensive SPA negotiation followed. KDB officially terminated the negotiation on February 6, 2024. The three specific points that did not move: (i) perpetual CB conversion timing, Harim wanted KDB and KOBC to convert the ₩1.7T perpetuals into common before closing so that the post-deal capital structure would be locked, the sellers wanted to retain the conversion option for use after closing as well; (ii) a five-year non-intervention covenant, the sellers wanted Harim to commit to no major asset disposals, no excessive dividends, and minimum capex spending for five years, which Harim resisted as overly restrictive on a private owner; (iii) a dividend cap during the same five-year hold period, the sellers wanted to keep HMM's ~₩12T cash inside the business for next-generation vessels and port investment, but the Harim consortium's acquisition financing structure required dividends to service deal-level debt. Harim filed a formal objection but ultimately accepted the termination. The sale was off.
Deal Summary
- Deal Value
- approx. ₩6.4 trillion (for ~57.9% stake) — never executed, SPA terminated
- Acquirer
- Harim Group · JKL Partners Consortium (Preferred Bidder)
- Target
- HMM Co., Ltd. (KDB+KOBC common stake plus partial perpetual CB conversion)
- Announced
- Dec 18, 2023 (Preferred bidder)
- Closed
- Feb 6, 2024 (SPA terminated)
- Country
- South Korea
Executive Summary
- [Largest Korean SOE sale on record collapses at SPA stage] On Dec 18, 2023, KDB and KOBC named the Harim Group and JKL Partners consortium preferred bidder for their HMM stake at approximately ₩6.4T. On Feb 6, 2024, the Share Purchase Agreement negotiation was terminated. It is the first Korean state-owned enterprise sale of this scale to fail at the binding-agreement stage.
- [The deal failed on the convertible, not on price] The three deciding points were (i) timing of perpetual convertible bond conversion, (ii) a five-year non-intervention covenant, (iii) a five-year dividend cap. This is the first Korean SOE precedent where a perpetual capital instrument, not headline price, determined deal feasibility.
- [₩1.7T of perpetual convertibles as a second layer of state control] In addition to the ~40% common stake being sold, KDB and KOBC jointly held approximately ₩1.7T of perpetual convertible bonds. If fully converted, those instruments alone would lift the state stake above 70%. Harim demanded conversion before closing to lock the post-deal cap table; the sellers refused, viewing the conversion option as a policy lever to retain after closing.
- [Five-year non-intervention covenant] The sellers wanted Harim to commit to no major asset disposals, no excessive dividends, and minimum capex spending for five years, to preserve HMM's role as Korea's last national-flag long-haul container carrier. Harim resisted, viewing the covenant as a five-year encumbrance on private ownership.
- [Dividend cap collided with LBO acquisition financing] The Harim-JKL consortium's acquisition financing structure required post-closing dividends to service deal-level debt. The sellers wanted a dividend cap to keep HMM's ~₩12T cash hoard inside the business. This is structurally a financial-buyer model versus industrial-stewardship conflict.
- [The ₩12T cash hoard as both attraction and concern] HMM's cash and equivalents of ~₩12T at 1Q 2023, a legacy of the 2021-2022 freight boom, made the company exceptionally attractive but also created strong seller-side concern about cash leakage to deal-level debt service after closing.
- [Industrial aftermath] No new sale process has been launched. KDB and KOBC partially converted the perpetuals after the failure, pushing the state stake above 70% and pre-strengthening their position for any future sale. POSCO, CMA CGM, and a Middle Eastern sovereign fund have been mentioned by the Korean press during 2024-2025 but no formal bid has emerged. As of May 2026, HMM remains majority state-controlled.
- [Standard for Korean SOE tenders re-set] Since this deal, every Korean SOE sale tender document has had to specify the treatment, conversion timing, and bidder obligations on perpetual capital instruments at the bid-launch stage. The Harim-HMM failure is the structural inflection point for Korean SOE deal design.
Industry Overview
Global container shipping has consolidated into a Maersk, MSC, CMA CGM top tier, each operating capacity in the 4 million TEU range. After Hanjin Shipping's 2017 bankruptcy, Korea was left with HMM as effectively its only long-haul national-flag container carrier. HMM stood at around 780,000 TEU by 2023, materially smaller than the global top three but anchored as a strategic asset for Korean shippers. Through the 2010s and 2020s, the Korean government, via KDB and KOBC, sustained HMM by combining debt-for-equity conversion, perpetual convertible bond support, fleet expansion targets (1.1M TEU by 2025), and alliance membership (THE Alliance, then the Gemini Cooperation with Maersk from January 2025). The 2023 sale process was the first attempt to transfer this state-built shipping asset to private hands.
HMM container capacity (2023)
~780k TEU
Global #9, ~2.8% market share
HMM cash and equivalents (1Q23)
~₩12T
Legacy of 2021-22 freight boom
Global top-3 average capacity
~4.0M TEU
Maersk, MSC, CMA CGM
Korean ports TEU (2023)
~29.4M TEU
Busan ~23M TEU
Container carriers with more than 40% direct government ownership are uncommon globally. This deal was a first test of whether Korea could transfer a stabilized, government-rebuilt shipping asset into private ownership, and on what conditions. The failure of the perpetual-CB and covenant negotiations meant the experiment did not complete. Subsequent restructuring-asset sales in Korea, including the eventual sale of Daewoo Shipbuilding to Hanwha in 2023, have explicitly drawn on the lessons of this case.
Key Players
Company Overview: HMM Co., Ltd. (formerly Hyundai Merchant Marine)
HMM was founded in 1976 as Asia Merchant Marine, renamed Hyundai Merchant Marine in 1983, and became the shipping arm of Hyundai Group. Following the 2016 creditor workout, debt-for-equity conversions and perpetual convertible bond support from KDB-led creditors recapitalized the business, and it was renamed HMM in April 2020. The company today is Korea's largest container carrier and the world's ninth largest by capacity. Its business is concentrated in container shipping (>90% of revenue) and bulk and terminal operations, with alliance membership transitioning from THE Alliance to the Gemini Cooperation with Maersk in January 2025.
Founded
1976 (as Asia Merchant Marine)
Renamed Hyundai Merchant Marine 1983, HMM 2020
Headquarters
Seoul
Korea's largest container carrier
Capacity (2023)
~780k TEU
Global #9 (Alphaliner basis)
FY2022 operating profit
~₩9.95T
Peak of COVID freight cycle
Deal Structure
Pre-deal ownership stood at KDB ~20% common, KOBC ~20% common, plus jointly held perpetual CBs of ~₩1.7T, with the remainder in public float. The intended post-deal structure would have placed the Harim-JKL consortium at approximately 57.9% (combining the sellers' common stake with a partial conversion of perpetuals at closing) for an aggregate consideration of approximately ₩6.4T. The SPA collapse means post-deal ownership did not change, and KDB and KOBC subsequently converted portions of their perpetual CBs, lifting state ownership above 70%. The post-deal diagram below should be read as an intended structure that was not executed.
Pre-Deal
Korea Development Bank (KDB)
~20% common + perpetual CB
HMM
Global #9 container carrier
Korea Ocean Business Corp (KOBC)
~20% common + perpetual CB
Public float / others
~60%
Perpetual CBs ~₩1.7T
Jointly held by KDB and KOBC
Post-Deal
Harim-JKL Consortium
Intended ~57.9% (not executed)
HMM
Privatization not executed
KDB
Intended residual (not executed)
KOBC
Intended residual (not executed)
Public float
Intended ~40% (not executed)
Key Terms
Advisors
The seller side combined Korea's two principal state institutions (KDB and KOBC) and the buyer side combined a strategic food conglomerate (Harim) with a domestic private equity firm (JKL Partners). Advisor mandates were correspondingly bifurcated, with major investment banks on both sides and top-tier Korean law firms carrying the legal load. Because the SPA collapse hinged on the legal interpretation of perpetual CB and covenant terms, legal advisors played an unusually central role.
KDB · KOBC — Sellers Advisors
Samsung Securities
Lead Sell-Side AdvisorRan the formal sale launch, bid solicitation, and preferred-bidder selection
Citigroup Global Markets
Financial Advisor to KDBTransaction structure, valuation, and perpetual-CB treatment advisory
Lee & Ko
Legal Advisor to KDBSPA drafting and negotiation, perpetual-CB right preservation, five-year covenant design
Shin & Kim (Sejong)
Legal Advisor to KOBCKOBC policy obligations and shipping industry stewardship covenants
Harim · JKL Partners — Acquirer Consortium Advisors
KB Securities
Lead Financial Advisor to HarimBid pricing, acquisition financing structure, LBO modeling
Mirae Asset Securities
Co-Financial AdvisorJKL-side valuation and acquisition-financing support
Kim & Chang
Legal Advisor to Harim and JKLSPA negotiation, perpetual-CB conversion-timing arguments, five-year covenant scope
Note: Advisor mandates reflect public disclosures and market reports; some supporting assignments are not officially confirmed.
Financials
Unit: KRW 100M | K-IFRS consolidated | Source: HMM annual reports and FSS DART filings. Note the gap between the 2021-22 freight boom and the 2023 normalization.
| Item | FY2019 | FY2020 | FY2021 | FY2022 | FY2023 |
|---|---|---|---|---|---|
| Revenue | KRW 55,131100M KRW | KRW 64,133100M KRW | KRW 137,941100M KRW | KRW 184,367100M KRW | KRW 84,285100M KRW |
| COGS | KRW 53,800100M KRW | KRW 53,400100M KRW | KRW 56,500100M KRW | KRW 64,500100M KRW | KRW 75,800100M KRW |
| Gross Profit | KRW 1,331100M KRW | KRW 10,733100M KRW | KRW 81,441100M KRW | KRW 119,867100M KRW | KRW 8,485100M KRW |
| SG&A | KRW 1,903100M KRW | KRW 1,924100M KRW | KRW 7,384100M KRW | KRW 20,413100M KRW | KRW 2,674100M KRW |
| Operating Income | KRW -2,997100M KRW | KRW 9,808100M KRW | KRW 73,775100M KRW | KRW 99,455100M KRW | KRW 5,849100M KRW |
| EBITDA | KRW 600100M KRW | KRW 12,500100M KRW | KRW 78,000100M KRW | KRW 105,500100M KRW | KRW 11,000100M KRW |
| EBITDA Margin | 1.1% | 19.5% | 56.5% | 57.2% | 13.1% |
Valuation
Valuation in this deal was driven by three interacting variables: HMM's ~₩12T cash balance, the assumed normalization of the container freight cycle from the 2021-2022 peak, and the embedded value of the ~₩1.7T perpetual convertibles. The Harim-JKL offer of ~₩6.4T for ~57.9% implies an equity value of around ₩11T for the company, while reported cash alone exceeded the implied equity, a structurally unusual setup that the market characterized as a cash-discounted sale. Sellers argued this required compensation through perpetual-CB rights and the five-year covenant; buyers viewed unconstrained use of HMM's cash as a core part of the deal's value.
| Metric | Value | Notes |
|---|---|---|
| Headline offer (Harim-JKL) | ~₩6.4T | For ~57.9% stake |
| Implied 100% equity value | ~₩11T | Simple gross-up, excludes perpetuals |
| HMM cash and equivalents (1Q 2023) | ~₩12T | Legacy of 2021-22 freight boom |
| Perpetual CBs outstanding (KDB+KOBC) | ~₩1.7T | Strike ~₩5,000, >70% state stake if fully converted |
| FY2022 operating profit | ~₩9.95T | Peak of COVID freight cycle |
| FY2023 operating profit | ~₩0.58T | Normalization phase |
| FY2022 EV/EBITDA (implied) | ~0.1x | Cash exceeded market cap, cycle distorted |
| FY2023 EV/EBITDA (implied) | ~1.0x | Normalized basis, still discount to global peers |
| Global container peer EV/EBITDA (cycle average) | ~3-5x | Maersk, MSC, CMA CGM, through-cycle |
Note: Figures are based on public filings and press reports. Container shipping EV/EBITDA multiples are highly cycle-sensitive and should be compared with care.
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Deal Rationale
Harim and JKL, Why HMM, and Why an LBO-Style Structure
- [Conglomerate scale leap] Harim Group's pre-deal asset base of around ₩17T would have roughly doubled to ~₩35T post-closing, advancing it from a mid-tier Korean group into the top ten by asset size. The transaction's strategic appeal to Harim was as much corporate-stature ambition as industrial logic.
- [Vertical integration with food and logistics] Harim's core businesses (livestock, animal feed, grain imports) depend heavily on global maritime logistics. Acquiring HMM offered the possibility of internalizing freight costs and accessing a global container network alongside the company's existing logistics platform.
- [JKL Partners and acquisition financing] The ~₩6.4T size was beyond Harim's standalone capacity, so JKL Partners was brought in as the financial partner to structure acquisition financing. The model assumed material post-closing dividends from HMM's ~₩12T cash hoard to service deal-level debt. That assumption directly collided with the sellers' demand for a five-year dividend cap.
- [Pre-closing conversion of the perpetuals] Harim viewed the unconverted ₩1.7T perpetual CBs as a future dilution and leverage instrument for the sellers. Its negotiating position required pre-closing conversion to lock the post-deal capital structure, so that KDB and KOBC could not use the perpetuals as a post-closing bargaining tool.
- [Withdrawal after termination] Harim filed a formal objection on Feb 6, 2024, but in practice accepted KDB's decision. The group has not re-bid for HMM in any subsequent process.
KDB and KOBC, Why the Sellers Walked Away From ₩6.4T
- [The perpetual CBs as policy instruments, not just bonds] KDB and KOBC viewed the ₩1.7T perpetual convertibles not as bonds to be redeemed but as policy levers retained for future use. Pre-closing conversion at Harim's demand would have permanently eliminated that lever, and the sellers concluded its policy value was not adequately reflected in the headline price.
- [Five-year non-intervention covenant as industrial protection] HMM is Korea's last meaningful national-flag container carrier. The sellers wanted a five-year commitment from a private acquirer that no major assets would be sold, no excessive dividends paid, and minimum capex carried out, in order to protect the policy investment that had recapitalized the company since 2016.
- [Dividend cap to lock cash inside the business] The ~₩12T cash hoard was, in the sellers' view, capital that should fund next-generation vessels (LNG, alternative fuels), terminal positions, and capacity expansion. A scenario where that cash flowed to acquisition-financing service rather than to HMM's industrial roadmap was politically and policy-wise unacceptable.
- [Concerns about the LBO structure] The Harim-JKL acquisition financing implicitly required leveraging HMM's balance sheet, a structure the sellers viewed as privatization by LBO that would weaken HMM's long-term competitive position.
- [Choosing termination over policy-instrument concessions] The sellers concluded that the long-term policy cost of accepting Harim's terms exceeded the short-term reputational and political cost of terminating the deal. KDB then partially converted the perpetuals into common after termination, lifting the state stake above 70% and pre-strengthening its hand for any future sale process.
Post-Deal Assessment (May 2026 as of)
Two years and three months after termination, no new HMM sale process has been launched. KDB and KOBC partially converted their perpetual convertible bonds after the deal collapsed, lifting combined state ownership above 70% and pre-strengthening their position for any future negotiation. POSCO, CMA CGM, and a Middle Eastern sovereign fund have surfaced in the Korean press during 2024 and 2025 as possible acquirers, but no formal tender has been issued. The container freight cycle has normalized, compressing HMM's operating profit and reducing the asset's attractiveness from a pure financial standpoint. The deal's most durable legacy is not whether HMM was sold but rather the way it permanently reset the design of Korean SOE sale tenders, since every subsequent process has had to pre-specify how perpetual capital instruments will be treated and what covenants the bidder will accept.
Positives
- [KDB and KOBC] Avoided a sale that would have surrendered the perpetual-CB lever, the five-year covenant, and the dividend cap. Post-termination perpetual conversion strengthened the state position to >70% for any future process.
- [HMM] Avoided a privatization-by-LBO scenario in which the ~₩12T cash hoard would have been redirected to acquisition-financing service rather than next-generation vessels and ports.
- [Korean SOE M&A market] Established the structural lesson that perpetual capital instruments, not headline price, determine deal feasibility. The standard for tender-document design has been reset.
- [Harim] The aborted ₩35T-asset leap also meant the LBO financing was never drawn, sparing the group the financial risk it would have carried into a normalizing freight cycle.
Risks & Concerns
- [KDB and KOBC] As the freight cycle normalizes, HMM becomes harder to sell on attractive terms; preserving perpetual-CB rights at the cost of delaying the sale may forfeit the right window.
- [State capital] State capital remains tied up in HMM with no clear exit timeline. As of May 2026 there is no formal sale calendar.
- [Harim Group] The group's centerpiece corporate-scale strategy was lost. Subsequent growth has had to come from within existing capital limits.
- [Korean shipping industry] Continued state control limits HMM's ability to pursue aggressive capacity expansion or M&A, leaving the gap with the global top three intact.
- [Open structural question] No public consensus yet on how perpetual-CB rights and stewardship covenants should be balanced to allow a Korean SOE sale of this scale to actually close.
This announcement appears as a matter of record only
Harim Group · JKL Partners Consortium (Preferred Bidder)
Acquirer
HMM Co., Ltd. (former Hyundai Merchant Marine)
Target
Failed Acquisition of HMM, First Korean SOE Deal Killed by Perpetual Convertible Bond Terms
Transaction Size
approx. ₩6.4 trillion (offered, not executed)
approx. USD 4.8 billion
EV / EBITDA
N/A (SPA terminated)
Multiple
Closed
Feb 6, 2024 (Negotiation Terminated)
Deal Date
Editor's Note
The lasting significance of this deal is not the ₩6.4T price tag that was never paid, but the demonstration that in a Korean state-owned enterprise sale, the treatment of perpetual capital instruments matters more than the headline price. KDB and KOBC structured and held the ₩1.7T perpetuals as policy levers, not as bonds awaiting redemption, while Harim and JKL treated them as dilution risk and as a post-closing weapon to be neutralized. That gap is not a price gap and cannot be bridged by raising or lowering the bid. Every subsequent Korean SOE tender document has therefore had to specify perpetual-instrument treatment up front. Reviewed as of May 2026.
Key Concepts in This Deal
A bond with no fixed maturity that converts into common shares at the holder's option. Accounted for as equity but legally a bond. The ₩1.7T perpetuals held by KDB and KOBC functioned as a policy lever, fully converted they would have lifted the state stake above 70%. Their treatment, not the headline price, decided this deal.
The bidder granted exclusive negotiating rights after an open auction. Selection as preferred bidder is not the same as deal closing, the Share Purchase Agreement still needs to be negotiated and signed. On Dec 18, 2023, Harim-JKL was selected, on Feb 6, 2024, the SPA negotiation was terminated.
Termination of a Share Purchase Agreement negotiation before signing, when the parties cannot agree on binding terms. SPA stage is normally seen as 90% of the way to closing, but this deal failed there over perpetual-CB treatment and covenant intensity.
A sale of a state-owned enterprise or restructuring asset by Korea Development Bank, Korea Ocean Business Corp, or another state body. After this deal, every Korean SOE tender document has had to specify how perpetual capital instruments will be handled at the bidding stage.
A controlling shareholder's right to force minority holders to sell their stakes on the same terms during a control transaction. The Harim-HMM SPA contemplated drag-along provisions for the state sellers' stake, but the agreement was terminated before any such right was exercised.
A post-closing commitment by the acquirer to refrain from major asset disposals, excessive dividends, or material changes to the business for a defined period (here, five years). Used to protect industrial stewardship in privatizations. The intensity of this covenant was a primary point of failure in this transaction.
The contractual event that activates the right to convert a convertible bond into shares. In this deal, the perpetual-CB conversion was at the holders' (KDB and KOBC) discretion, and Harim's demand to force pre-closing conversion was the central commercial sticking point.
An asset where the government or a state creditor has recapitalized, often through debt-for-equity conversion, perpetual capital injections, and bridge facilities, after a private collapse. HMM, Daewoo Shipbuilding, and Ssangyong Motor are Korean examples. Selling such assets typically requires balancing perpetual-instrument rights with industrial-stewardship covenants.
Frequently Asked Questions
Why did the deal fail at ₩6.4T when both sides agreed on price?
The failure was not about price. It was about three SPA terms. First, [perpetual CB conversion timing], Harim wanted KDB and KOBC to convert the ₩1.7T of perpetuals before closing so the post-deal capital structure would be locked, the sellers wanted to keep the option after closing. Second, [a five-year non-intervention covenant], the sellers wanted commitments on no major asset disposals, no excessive dividends, and minimum capex spending, Harim viewed these as overly restrictive on a private owner. Third, [a five-year dividend cap], the sellers wanted to prevent HMM's ~₩12T cash from flowing to acquisition-financing service, Harim's LBO structure needed those dividends. None of these is a price-bridgeable gap.
Why were the ₩1.7T perpetual convertibles so important?
Perpetual convertibles are bonds with no maturity that count as equity for accounting but can convert into common shares at the holder's option. KDB and KOBC's perpetuals had a low strike price (around ₩5,000 / share), meaning full conversion would lift the state stake from ~40% to above 70%. That made them, in effect, a [latent control instrument] that the sellers wanted to retain even after a private sale. Harim, conversely, viewed unconverted perpetuals as a permanent dilution overhang and as a post-closing bargaining weapon to be eliminated. Both views were rational; both were incompatible.
Why did KDB and KOBC walk away from ₩6.4T?
The sellers viewed the perpetual-CB rights, the non-intervention covenant, and the dividend cap as policy instruments, not as commercial niceties. Accepting Harim's terms would have stripped those instruments out of the deal and converted HMM, in their view, from a state-stewarded last national-flag carrier into a privately leveraged LBO. They concluded the long-term policy cost of those concessions exceeded the short-term political cost of termination. KDB and KOBC then partially converted the perpetuals after termination, pre-strengthening their hand for any future process.
Why did Harim need an LBO structure to buy HMM?
₩6.4T was beyond Harim Group's standalone capacity. JKL Partners was brought in as the financial partner, and the consortium's acquisition-financing structure required post-closing dividends from HMM to service the deal-level debt, a standard PE LBO model. From the sellers' perspective, this meant HMM's ~₩12T cash, intended for next-generation vessels and ports, would instead pay acquisition debt, that view drove the dividend-cap requirement. Structurally this is a [financial-buyer model versus industrial-stewardship] conflict, not a price disagreement.
What has happened to the HMM sale since the deal collapsed?
As of May 2026, no new formal sale process has been launched. KDB and KOBC partially converted their perpetual CBs after the failure, lifting combined state ownership above 70%. POSCO, CMA CGM, and a Middle Eastern sovereign fund have surfaced in the Korean press as possible future acquirers but no tender has been issued. The freight cycle has normalized, compressing HMM's operating profit and reducing the asset's attractiveness, leaving the sellers in a trade-off between preserving perpetual-CB rights and waiting for the right window to sell.
What did this deal change about Korean state-owned enterprise sales?
Two things. First, it established that [perpetual capital instruments, not headline price, can determine the feasibility of a Korean SOE sale]. Every subsequent SOE tender document has had to pre-specify the treatment, conversion timing, and bidder obligations for any perpetual instruments. Second, it elevated [non-intervention covenants and dividend caps] from peripheral terms to deal-defining ones. In Korean SOE M&A, the covenant package and the perpetual-instrument package must now be settled before price negotiation gets serious.
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Sources & Notes
- [1]Korea Economic Daily, Harim selected as preferred bidder for HMM (Dec 18, 2023)
- [2]Maeil Business News, HMM sale collapses as KDB and Harim fail to bridge perpetual-CB gap (Feb 7, 2024)
- [3]Chosun Biz, The real reason the HMM sale failed, ₩1.7T of perpetual convertibles (Feb 7, 2024)
- [4]Seoul Economic Daily Signal, A ₩6.4T mega-deal blocked by perpetual convertibles (Feb 7, 2024)
- [5]Investchosun, Why KDB and KOBC could not surrender their perpetual-CB rights (Feb 8, 2024)
- [6]The Bell, Harim-JKL LBO structure clashed with the five-year dividend cap (Feb 13, 2024)
- [7]Reuters, South Korea's Harim Group fails to clinch HMM deal (Feb 7, 2024)
- [8]MEED, Korea Development Bank walks away from HMM sale to Harim
- [9]Korea Economic Daily, HMM sale restart unclear, POSCO and CMA CGM cited (Apr 2025)
- [10]Chosun Biz, Two years after the failed HMM sale, state stake exceeds 70% via perpetual-CB conversion (Feb 2026)