Asia/Pacific News
More Sources Point to COSCO Group, China Shipping Group Merger
There are increasing signs of a merger between two of China’s state-owned shipping enterprises, China Ocean Shipping (Group) Company (China COSCO) and China Shipping (Group) Company (CSG), Seatrade Maritime reports.
Large portions of the two companies have reportedly ceased share trading “pending an announcement” causing merger speculation to heat up.
"The idea (of a possible merger) exists," a Reuters source said to have direct knowledge of the matter was quoted as saying.
"The matter is being discussed."
Other reports indicate that the operations of China COSCO and CSG may be consolidated - either in whole or in part - as sources say executives of the two companies have been tasked with establishing an investment and operating platform.
“China's shipping sector has been the poster boy for over-investment and overcapacity. Any restructuring which addresses that problem would be a step in the right direction,” said Tom Orlik, Chief Asia Economist for Bloomberg Intelligence.
Meanwhile, DNB Markets say that should a China COSCO and CSG merger be realised, it would mean that the resulting entity would control 8 percent of global transportation capacity, compared to the 15.3 percent that is controlled by Maersk Line.
“On a standalone basis, consolidation is positive, but would not have a material impact,” stated DNB Markets.
Sources speculate that fewer, yet larger companies would be a positive development for Maersk Line, suggesting it would be easier to maintain discipline until the container market gains back the momentum expected by 2017.
In May, it was reported that China COSCO Holdings Company Limited and China Shipping Container Lines Co., Ltd. (CSCL) had denied persistant speculation that COSCO Container Lines Co., Ltd. (COSCON) and CSCL were working toward a merger.
