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Posco Group considers acquisition of HMM to enhance logistics efficiency

Published: 08 Sep. 2025, 18:22 Updated: 15 Sep. 2025, 13:07

The Posco E&C headquarters in Incheon [NEWS1]

Posco is reviewing the acquisition of HMM, Korea’s largest shipping line, as it seeks to counter slowing growth in steel and secondary battery materials with lower logistics costs and greater supply chain stability.

Industry sources said Friday that Posco has recently hired Samil PwC, Boston Consulting Group and a major law firm to assess the feasibility of acquiring HMM. The plan is part of a groupwide effort to cut annual logistics spending — estimated at 3 trillion won ($2.16 billion) — and secure transport capacity ahead of rising demand for bulk carriers.

As one of Korea’s largest shippers, HMM handles more than 10 percent of Korea’s cargo volume. Owning a carrier outright could give Posco both savings and stability, while also linking operations with assets such as liquefied natural gas (LNG) terminals operated by Posco International. The move also reflects Posco’s push to strengthen logistics amid recurring global supply chain disruptions.

Skepticism remains, however, over whether HMM is a good fit. More than 80 percent of HMM’s revenue comes from container shipping, while it operates only one LNG carrier. Posco’s shipping needs are heavily centered on bulk cargo, meaning a major restructuring of HMM’s fleet would be required to realize synergies.

Cost is another hurdle. Market observers estimate the 36.02 percent stake in HMM held by the Korea Development Bank (KDB) — the portion expected to be put up for sale — to be worth over 7 trillion won. Harim Group, named preferred bidder in 2023, offered around 6.4 trillion won at the time.

Since then, HMM has improved its earnings through fleet expansion and freight rate stabilization, while share buybacks and cancellations have boosted shareholder value, pushing its price tag higher.

Posco's steel mill in Pohang, North Gyeongsang, Sunday after the fire in the early morning was completely extinguished. [YONHAP]

Once HMM’s current share repurchase program concludes on Sept. 12, KDB and the Korea Ocean Business Corp., which owns 35.7 percent, are expected to see their stakes fall to the low-30-percent range. The government will then launch a competitive bidding process to select a new owner.

Analysts warn that acquiring HMM could place a financial strain on Posco. It had 16.5 trillion won in cash equivalents as of June, giving it ample firepower, but also faces 8.8 trillion won in annual capital expenditures, weaker conditions in steel and battery markets, and rising safety costs after recent construction accidents at Posco E&C sites.

Regulatory and labor issues may also complicate the deal. Under Korea’s Shipping Act, companies effectively controlled by a single large cargo owner must secure prior approval from the Ministry of Oceans and Fisheries to enter the shipping business. Labor opposition to government-led efforts to move HMM’s headquarters to Busan also means any buyer could face labor disputes.

“From a logistics efficiency perspective, the acquisition could be meaningful in the long term,” said Lee Jae-yoon, head of the Carbon Neutral Industry Transition Research Office at the Korea Institute for Industrial Economics & Trade (KIET). “But shifting HMM’s container-heavy portfolio toward bulk and LNG shipping would require substantial time and investment. A restructuring strategy beyond simple cost savings is essential.”

“No decision has been made regarding the acquisition of HMM,” said a Posco spokesperson. “The group is at an early stage of reviewing the business case and potential for strategic synergies.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY PARK YOUNG-WOO [[email protected]]