SOUTH Korea’s steel giant Posco has confirmed it is reviewing a potential acquisition of the country’s largest shipping firm, HMM, as part of its search for new growth drivers.

In a stock exchange filing, the company said it was assessing “strategic synergies” with future businesses, but had not made a decision on whether to proceed the takeover or not.

Posco has reportedly assembled an advisory team — including Samil PwC, Boston Consulting Group, and major law firms — to evaluate HMM’s business prospects.

The move comes amid prolonged challenges in Posco’s core steel business, pressured by Chinese oversupply, weak domestic demand, and US tariffs. Its secondary battery sector has also slowed, raising the urgency to diversify.

Since early 2024, the group has been restructuring its portfolio. Last year it sold underperforming units, cutting non-core assets, and generated Won662.5bn ($475m) in cash through divestments. It aims to secure another Won1.5trn this year by scaling back 61 businesses.

Industry observers say a major incentive for targeting HMM lies in reducing logistics costs.

Posco accounts for more than 10% of South Korea’s shipping volumes and spends roughly Won3trn annually on maritime transport, according to Koo Kyo-hoon, chairman of the Korea International Cargo & Logistics Carrier Association.

Koo noted in a recent column published by local media that controlling a shipping line could strengthen supply chain resilience and vertically integrate its logistics — from importing raw materials like iron ore to exporting finished steel products.

HMM’s largest current shareholders are state-owned Korea Development Bank and Korea Ocean Business Corp, which hold 36% and 35.7% stakes, respectively.

Following the completion of HMM’s Won2trn share buyback program scheduled on September 12, both stakes are expected to fall into the low-30% range.

Posco is seen as a leading contender to purchase KDB’s holding, which would make it HMM’s largest shareholder. Local media reports suggest Posco is considering joint management with KOBC to share the financial and operational burden.

KB Securities analyst Choi Yong-hyun, however, cautioned that challenges remain.

HMM derives about 80% of its revenue from container shipping, while Posco’s logistics strengths lay mainly in bulk carriers, narrowing potential synergies, he argued.

Posco also faces financial pressure. As of the second quarter of this year, the company held Won16.5trn in cash and equivalents against net debt of Won10.9trn, with around Won8.8trn earmarked for capital expenditure this year. Acquiring a 30% HMM stake would likely cost Won7trn–Won8trn.

“With both its steel and secondary battery businesses in a down cycle, the acquisition could pose a financial burden to Posco,” Choi said.

Moreover, under Korea’s Shipping Act, any major shipper entering the shipping sector requires approval from the Ministry of Oceans and Fisheries’ policy advisory committee.

Choi said while Posco had the capacity, a measured strategy focused on areas of true synergy would be more prudent than a full-scale acquisition.

HMM declined to comment on Posco’s review when contacted by Lloyd’s List.