World News
Hapag-Lloyd in Merger Talks with UASC
Germany-based Hapag-Lloyd AG (Hapag-Lloyd) today announced it is in talks with United Arab Shipping Company (UASC) over a cooperation agreement that could include a merger of operations.
For this purpose Hapag-Lloyd says the companies are basing negotiations on relative business valuations of 72 percent for Hapag-Lloyd, and 28 percent for UASC.
Such a merger would create the world's fifth-largest container shipping group, according to Alphaliner data, with 7.2 percent of global capacity.
"A merger would be a positive step for Hapag-Lloyd, as size matters in that highly competitive industry," Thomas Wybierek, a shipping analyst at Norddeutsche Landesbank Girozentrale (Nord/LB) told Bloomberg.
The news comes just one day after an announcement by CMA CGM S.A. (CMA CGM) that it has formed a new shipping alliance with COSCO Container Lines (COSCO), Evergreen Line (Evergreen), and Orient Overseas Container Line (OOCL), leaving UASC and Hapag-Lloyd, among others, to find new partners to fill in the gaps of their now altered alliances.
UASC has six 18,000+ TEU vessels, so a merger with UASC would give Hapag-Lloyd access to ULCVs that, despite operating on Asia-Europe trade routes, does not currently possess.
"Hapag-Lloyd so far shied away from ordering the biggest vessels though stakeholder Kuehne has pushed publicly in that direction," Oliver Drebing, an analyst at SRH Alsterresearch AG (Alsterresearch).
"If the merger works out, Hapag-Lloyd would no longer have to make the decision to order bigger ships."
In December 2014, Hapag-Lloyd and Compañía Sud Americana de Vapores (CSAV) announced that they had completed their merger - a move that has subsequently shown to be of benefit to the carrier.
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