POSCO Group Pursues HMM Acquisition, Forms Advisory Panel to Assess Business Viability

Accounting, Consulting, and Law Firms Form Advisory Panel; Synergy Expected with Existing Businesses

With 7 Trillion Won in Cash Reserves, Acquisition of KDB's 36% Stake and Joint Management with KOBC Under Review

HMM Expands Algeciras Terminal in Spain (Seoul=Yonhap News) HMM announced on the 2nd that it will expand and develop its currently operating container terminal (TTIA) in Algeciras, Spain, by 2028. HMM acquired a 100% stake in TTIA in 2017 and sold a 50% stake minus one share to French shipping company CMA CGM in 2020 for a strategic alliance. The photo shows the Algeciras terminal in Spain. 2025.7.2 [Provided by HMM. Reproduction and database prohibited] photo@yna.co.kr

POSCO Group is pursuing the acquisition of HMM, South Korea's largest shipping company.

Amidst a downturn in its core steel business and the struggling battery materials sector, POSCO Group appears to be actively considering entering the shipping industry, a key national infrastructure, as a new growth engine.

According to investment banking (IB) industry sources on the 4th, POSCO Group has contracted with Samil PwC, Boston Consulting Group, and a major law firm to form an advisory panel to assess HMM's business viability.

Regarding this matter, POSCO Group stated, "We are currently reviewing whether it has promising future growth potential and can create strategic synergy with the group's businesses. We have not yet decided whether to participate in the acquisition."

However, industry observers believe that POSCO Group, which is undergoing restructuring due to the sluggish performance of its core steel and battery businesses, shows a strong intention to acquire HMM by thoroughly examining its business prospects.

HMM's major shareholders are the Korea Development Bank (KDB) (36.0%) and the Korea Ocean Business Corporation (KOBC) (35.7%).

Once HMM's ongoing public tender offer for treasury shares concludes on the 12th, the stakes held by KDB and KOBC will each decrease to the low 30% range.

POSCO Group is reportedly strongly considering acquiring KDB's stake to become the largest shareholder.

Given the financial burden of acquisition costs, a plan for joint management with KOBC, rather than sole management, is also being considered.

HMM's market capitalization is around 23 trillion won. Considering POSCO Holdings' cash and cash equivalents of approximately 7 trillion won at the end of the first half of the year, its acquisition capacity is deemed sufficient.

KDB and KOBC had temporarily suspended the sale process of HMM after the negotiation with Harim Group fell through in February last year.

KDB plans to initiate the HMM sale process as early as this year. It is anticipated that the sale of HMM will be accelerated once the vacant KDB chairman position is filled.

POSCO Group has been mentioned as a potential acquirer whenever plans for HMM's privatization, under KDB's management, emerged. However, POSCO Group has repeatedly stated that it has no intention to acquire.

POSCO Holdings also stated during its second-quarter earnings conference call, "We are not considering the acquisition of HMM at all as it does not align with our mid- to long-term business direction."

POSCO Group's active consideration of acquiring HMM appears to stem from the judgment that it could become a new growth engine that generates synergy with its existing businesses. POSCO Group has experience managing a shipping company, Geoyang Shipping, during its Pohang Steel days. It exited the shipping industry in 1995 after selling Geoyang Shipping to Hanjin Shipping.

However, some argue that cautious observation is needed to determine if entering the shipping industry can be a groundbreaking turning point in finding a business breakthrough for the group, as POSCO Group is facing difficulties in its core steel sector due to a triple threat of oversupply from China, sluggish domestic demand, and U.S. tariffs, and is also struggling in the battery materials sector, its future business, with business stagnation in its key markets of the U.S. and South Korea.

A POSCO Group official stated, "The current assessment of HMM's business viability is not based on an assumption of acquisition, but rather to examine whether there are aspects that can create synergy with POSCO Group. However, if business viability is confirmed, we may proceed with it in earnest."