Hyundai Merchant Marine Co. and Mediterranean Shipping Co. are in pole position to buy Long Beach's biggest container terminal, say people familiar with the matter, in a joint bid that may bolster the Korean operator's effort to join a major shipping alliance.

People involved in the talks said Hyundai Merchant and Geneva-based Mediterranean Shipping are expected to win the race for the 385-acre facility that handles 3 million containers after another bidder, Korean Line Corp., withdrew its bid on Tuesday.

At stake is a 54% share of Terminals International LLC, a port operator in Long Beach, Calif., owned by Hanjin Shipping Co., which went bankrupt in August and is being sold in pieces. Mediterranean Shipping already owns the remaining 46% of the Long Beach terminal.

An unnamed Korean investment fund is another contender for the terminal, and the winner is expected to be announced in coming weeks, the people said.

Los Angeles and Long Beach are the two biggest U.S. ports in terms of capacity. They handle the majority of imports and exports between the U.S. and Asia, moving more than 15 million containers annually.

Hyundai Merchant, which controls a 2.2% market share in global container capacity but is struggling with record low freight rates and falling demand, has been in discussions to join the 2M Alliance. The alliance's current members, Maersk and Mediterranean Shipping, are the world's two biggest container operators and move a combined 32.4% of all seaborne containers.

Hyundai Merchant signed a memorandum of understanding to join 2M in July, as part of a debt restructuring that gave the flagship unit of the Hyundai Group breathing room to avoid bankruptcy. But 2M executives told The Wall Street Journal last week that following Hanjin's collapse, customers balked at the inclusion of a Korean carrier in 2M because of concerns about such a company's strength. The alliance is looking for "looser forms of cooperation," including taking over Hyundai Merchant's chartered vessels and deploying them into the 2M network, these executives said.

Hyundai Merchant denied it was being excluded from the alliance. Senior company executives are in Copenhagen negotiating a potential deal, according to people familiar with the matter.

"Winning the stake in Long Beach will boost Hyundai Merchant's status, but I don't think it will be enough to convince Maersk and Mediterranean Shipping to accept it into the 2M alliance" said Basil Karatzas, a New York-based maritime adviser. "The risk of having a Korean shipping company as an equal alliance partner is seen as too high."

Write to Costas Paris at costas.paris@wsj.com

(END) Dow Jones Newswires

December 07, 2016 12:45 ET (17:45 GMT)