UASC and Hapag-Lloyd agree merger deal
German container shipping line Hapag-Lloyd AG has agreed a merger deal with United Arab Shipping Company (UASC), creating a group with an estimated value of US $7.7-8.9 billion.
Hapag-Lloyd said its supervisory board had approved the deal, which would see it take all shares in Kuwait-based UASC. Hapag-Lloyd’s anchor shareholders and UASC shareholders still need to give consent and a meeting of UASC shareholders is scheduled for Wednesday.
Hapag-Lloyd shares were up by 3.4 percent on the news. Consolidation in the container shipping sector is seen as a good thing by analysts.
The sector has seen a wave a mergers and acquisitions, particularly in Asia, as companies try to shore up against a critically weak market. The industry is suffering its worst downturn since its origins in the 1950s and 1960s due to a combination of weak consumer demand and overcapacity
Besides full mergers companies are also seeking alliances and vessel sharing arrangements to pool trips and save money.
A merger between UASC and Hapag-Lloyd will create a shipping group that is the 5th largest in the world and will give Hapag-Lloyd access to bigger ships on the important Asia to Europe trade route, while UASC will gain wider access to trans-Atlantic and trans-Pacific loops, where Hapag-Lloyd is strong.