Dive Brief:
- Korea Line will purchase Hanjin's remaining Trans-Pacific assets next week, a spokesman for Seoul's Central District court told Bloomberg via text.
- The spokesman did not reveal the value of the deal, but stated Korea Line's higher bid price and willingness to take on all employees contributed to the decision. Local media reports claim the sale could be worth up to $214 million, according to The Wall Street Journal.
- The sale is expected to close within two weeks and includes a 54% stake in Total Terminals International, five container vessels, seven overseas subsidiaries and a logistics network, according to Korea JoongAng Daily.
Dive Insight:
The South Korean court's decision surprised many analysts who expected Hyundai Merchant Marine (HMM) to win out on the final bid given expressed creditor and government favor for the shipping line since day one.
In fact, the South Korean government seems to be betting on HMM to lead the country's shipping industry revival plan as the remaining major global shipper. At a recent ministers' meeting, the government approved a $5.68 billion Shipping Industry Competitiveness Plan to help HMM order 20 13,000 TEU container vessels and create a new vessel leasing company, which will subsidize chartered ships for Korean shippers.
Korea Line's bid victory over HMM is a small setback to this plan, although the line's role within the revitalization plan is unclear.
Korea Line is the country's second-largest bulk carrier, with no prior share in the container shipping market. The South Korean court appears to have prioritized bid value both in reduced synergies and total value rather than perceived competitiveness. If Hanjin proved anything, after all, it is that bigger is not necessarily better.
HMM may still be able to access some of the Hanjin vessels, however. Whether Korea Line will fully engage in container shipping or charter the vessels remains to be seen. In addition, the Mediterranean Shipping Company still has priority rights over Total Terminals International, and could buyout Korea Line's stake. Such a move could benefit HMM in the long-run given HMM's bid to join the 2M alliance, while Korea Line remains unaffiliated.
Korea Line and HMM both recently underwent restructuring programs and are looking to diversify their portfolio.
