Pan Ocean Shares Surge After Parent Ends Costly HMM Bid
By Kwanwoo Jun
Pan Ocean's shares surged after a consortium led by its parent ended an otherwise costly bid for ailing container-shipping company HMM.
The South Korean bulk-carrier operator's stock climbed as much as 28% to 4,580 won ($3.45) in early Wednesday trade, on course to post its sharpest daily gain in almost four years and outperforming the benchmark Kospi's 1.4% rise, according to FactSet.
The rally came after state lender Korea Development Bank, the main creditor for HMM, said late Tuesday that seven-week negotiations on selling the container shipper to preferred bidder Harim Group, the poultry-processing parent of Pan Ocean, broke down due to differences over some issues, which KDB didn't elaborate on.
The breakdown in the KDB-Harim talks can be a valuation boost for Pan Ocean, which is now relieved of pressure to help its parent company fund the KRW6.4 trillion deal by issuing new shares worth between KRW2 trillion and KRW3 trillion, NH Investment & Securities analyst Y.S. Jung said in a research note Wednesday.
Pan Ocean's shares had slumped more than 20% since the acquisition talks began in mid-December, reflecting market worries about a possible valuation hit for the company from adding a sizable number of new shares to the equities market.
Pan Ocean's planned new rights issue of KRW2.5 trillion to help support the acquisition deal could have resulted in a 64% stock dilution for the company, Nomura analyst Eon Hwang said in a recent research note.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
February 06, 2024 22:28 ET (03:28 GMT)
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