Orix reportedly to buy stake in Hyundai marine logistics unit

Bloomberg

Orix Corp. has agreed to buy a stake in Hyundai Merchant Marine Co.’s logistics unit and may announce a deal as soon as Thursday, sources said.

The Tokyo-based finance and leasing company and a South Korean partner will buy a majority stake in the unit Hyundai Logistics Co., said one source, who asked not to be identified discussing private information.

The board of Hyundai Merchant, South Korea’s No. 2 shipping company, met Wednesday to approve the sale, a second source said.

Hyundai Group said in March it’s considering divesting a stake in Hyundai Logistics as part of the South Korean conglomerate’s plans to raise 3.3 trillion won ($3.2 billion) from asset sales to ease a cash crunch. The purchase will add to the $5.2 billion in acquisitions Orix has announced in the past three years, according to data compiled by Bloomberg.

Orix spokeswoman Tamaki Shibata declined comment. In a text message, Hyundai Group also chose not to comment.

Hyundai Group is selling its entire stake in Hyundai Securities Co., properties and businesses as a slump in the global shipping industry has caused its main Hyundai Merchant Marine unit to struggle to repay maturing debt.

Orix, whose operations include leasing, lending and real estate, has been expanding abroad as the shrinking population limits the domestic growth potential of Japanese businesses.

Orix owns Orix Aviation Systems Ltd., which leases planes to carriers around the world, and Orix Maritime Corp., which charters ships. It has built several logistics centers in Japan.

Hyundai Group has raised about 2 trillion won from selling assets, including its liquefied natural gas shipping operations, the group said in June.

Hyundai Group was founded in 1947 by Chung Ju-yung. Hyundai Motor Group was spun off in 2000 amid efforts to reduce the power of the chaebol business groups. Hyundai Heavy Industries Group, which owns shipbuilders and a refiner, separated in 2002, while a department store unit left in 1999.

The chaebol industrial conglomerates often control units through a web of cross-shareholdings. Hyundai Merchant is the biggest shareholder of 11 of Hyundai Group’s 20 subsidiaries. Hyundai Elevator Co. is the biggest shareholder of Hyundai Merchant and Hyundai Logistics is the second-biggest for Hyundai Elevator.

Orix in December agreed to sell its entire 71.9 percent stake in STX Energy Co., a South Korean company that operates power plants and was sold to help raise funds for its cash-strapped parent STX Group. The stake was sold to GS Holdings Corp. and LG International Corp. for 630.7 billion won.