Hyundai Merchant Surges as It Seeks to Join 2M Allianceby
Alliance of Maersk and Mediterranean Shipping is known as 2M
Joining 2M will boost competitiveness, Korean company says
Hyundai Merchant Marine Co. gained the most in more than two decades in Seoul trading on optimism a restructuring plan for South Korea’s second-biggest container liner will get a boost as it seeks to join the world’s largest shipping alliance.
The company has started talks to join a grouping known as 2M, which is led by AP Moeller-Maersk A/S and Mediterranean Shipping Co., it said in an e-mailed statement on Thursday. Shares of Hyundai Merchant advanced by the daily limit of 30 percent, the most since October 1995, to close at 15,400 won in Seoul.
“The announcement is raising expectations that this will clear a big obstacle and help turn things around for Hyundai Merchant,” said Park Moo Hyun, an analyst at Hana Daetoo Securities Co. in Seoul. “But there’s still a way to go since talks just started and it remains uncertain how this will help Hyundai Merchant.”
The company and bigger rival, Hanjin Shipping Co., are among unprofitable liners worldwide that are taking steps including debt restructuring and asset sales to improve their balance sheets as overcapacity and slowing trade lead to a prolonged downturn in rates. Hanjin Shipping gained 3.9 percent at the close of trading.
Joining the alliance will help Hyundai Merchant reduce costs and improve its competitiveness, the Seoul-based company said the statement. It will also enable Maersk and Mediterranean Shipping to bolster their services on trans-Pacific routes, said the Korean company, which ended talks to join The Alliance, whose members include Hapag-Lloyd AG and Hanjin Shipping.
The 2M alliance is positively reviewing the proposition by Hyundai Merchant, Soren Toft, chief operating officer of Maersk Line, said in an e-mailed response to a Bloomberg News. “The inclusion of Hyundai Merchant Marine in 2M would, for example, provide us with extended coverage and a stronger product in the trans-Pacific trade,” he said, adding that it’s still early days to comment further.