Hapag-Lloyd, UASC ink deal to create mega firm

Dubai - Merged firm to become fifth-largest container company worldwide

German container shipping giant Hapag-Lloyd and Dubai-headquartered United Arab Shipping Company announced on Monday a mega merger deal to create the world's fifth-largest container firm.
"Hapag-Lloyd and United Arab Shipping Company [UASC] have signed a business combination agreement to merge both companies, subject to the necessary regulatory and contractual approvals," the two firms said in a joint statement.
Financial details of the merger that would create a giant fleet of 237 ships with a total capacity of 1.6 million TEU (twenty-foot equivalent units) were not disclosed.
The combined fleet will include UASC's six recently received 18,800 TEU ships, known for their superior eco-efficiency credentials, as well as 11 newly-built 15,000 TEU ships, the last of which will be delivered soon. With an average age of 6.6 years and average size of 6,600 TEU the combined company will have one of the most modern and efficient vessel fleets in the industry. Once two companies' fleets are integrated, the merged entity is expected to transport around 10 million TEU to destinations around the world each year.
The merged firm will be the key player in the new "THE Alliance" - consisting of Hanjin, Hapag-Lloyd, K-Line, Mitsui OSK Lines, Nippon Yusen Kaisha and Yang Ming. THE Alliance is scheduled to begin operation in April 2017 and will cover all East-West trade lanes including Asia-Middle East/Arabian Gulf and Red Sea.
"Hapag-Lloyd and UASC now take the next step to further consolidate and shape the liner shipping industry. The new transaction is strengthening not only our market position, but also our service portfolio. The merger will create annual net synergies of at least $400 million and save a significant amount of capital expenditure for the company," said Michael Behrendt, chairman of the supervisory board of Hapag-Lloyd.
"During its 40-year history, UASC has grown from a regional carrier to become a truly global one with comprehensive coverage of the main trade lanes and a state-of-the-art fleet," said Dr Nabeel Al Amudi, chairman of the board of directors of UASC.
"We are very proud of UASC´s achievements over the years that paved the way for such a remarkable deal," he added.
Following regulatory and contractual approvals, the merger is expected to be completed by the end of 2016. Until then, UASC and Hapag-Lloyd will continue to operate as stand-alone companies. Each company will also operate in its own alliance as currently structured until the end of March 2017, after which THE Alliance will commence operations.
"This strategic merger makes a lot of sense for both carriers - as we are able to combine UASC's emerging global presence and young and highly efficient fleet with Hapag-Lloyd's broad, diversified market coverage and strong customer base," said the German firm's chief executive Habben Jansen.
The combined firm will remain listed on the German stock exchange and retain Hapag-Lloyd's HQ in northern port city Hamburg.
UASC's majority shareholders, Qatar Holding and the Public Investment Fund of Saudi Arabia, will take stakes of 14 per cent and 10 percent in the merged company.
CSAV, the city of Hamburg and Kuehne Maritime will remain the largest shareholders in Hapag-Lloyd.
Hapag-Lloyd comes to the UASC deal off the back of a successful purchase of Chilean firm CSAV's container shipping arm and its own stock market flotation, both in 2015.
"With this merger, we are embarking on an exciting new phase of UASC´s growth," said Jorn Hinge, President and CEO of UASC. "Leveraging on UASC´s heritage in the Middle East as well as our recent growth in other markets, the combined company will provide customers with valuable expertise and very efficient service offerings in all major trade lanes and markets around the world," he said.
- issacjohn@khaleejtimes.com

• Infrastructure