Hapag-Lloyd and CSAV signed a binding contract to complete a merger to create the world’s fourth-largest container line.
Following the merger, Hapag-Lloyd will have 200 vessels with total transport capacity of around 1 million 20-foot-equivalent units, an annual transport volume of 7.5 million TEUs, and annual turnover of €9 billion.
The merger allows Hapag-Lloyd to remain in the upper ranks of global container lines. Its capacity will trail only Maersk Line, Mediterranean Shipping Co., and CMA CGM, the partners in the planned P3 Network.
Hapag-Lloyd is a member of the G6 alliance with OOCL, Hyundai Merchant Marine, NYK, APL and Mitsui O.S.K. Lines.
The merged carrier would control 25 percent of the trans-Atlantic trade lanes, 12 percent of the Latin American market, 7 percent of the trans-Pacific trade, and 4 percent of the Asia-Europe trade, according to estimates by Jefferies and shipping analyst Alphaliner.
CSAV will hold an initial 30 percent stake in the merged company, making it one of Hapag-Lloyd’s largest shareholders, along with the City of Hamburg and Kuehne Maritime, which is owned by Klaus Michael Kuehne, the majority owner of Kuehne + Nagel, the Swiss-based global logistics group.
The Chilean carrier’s share will increase to 34 percent when CSAV contributes €259 million of a €370 million capital increase after the merger takes effect. A second €370 million increase is anticipated from Hapag-Lloyd’s planned stock exchange listing, which is expected within the next 12 to 18 months.
The company’s head office will remain in Hamburg. Hapag-Lloyd will have a regional office in Chile, where CSAV is based, for Latin America business.
Michael Behrendt, chairman of Hapag-Lloyd’s executive board, and Oscar Hasbún, CSAV’s chief executive, said the merger would create a stronger company by matching Hapag-Lloyd’s strength in east-west trades with CSAV’s position on north-south routes.
The companies said the merger would produce annual savings of at least $300 million, and that the Hapag-Lloyd and CSAV service networks, fleets, and ship orderbooks are complementary.
“By integrating CSAV’s container business, Hapag-Lloyd is able to build on its strengths and is therefore in an excellent position for future growth,” Behrendt said.
Hasbún said the merger will create “a stronger, larger and more global company with significant economies of scale and a considerably improved competitive position.”
At the end of April, Hapag-Lloyd will put into service the last of 10 13,200-TEU vessels ordered for the Far East trade. CSAV has seven 9,300-TEU vessels scheduled for delivery in 2014 and 2015; these container ships are specially designed for the South American trade.
“This means that we will have a young and cost-efficient fleet. The use of optimum tonnage in the trades is one of the key prerequisites for successful operations in the face of international competition,” Hasbún said.
The boards of both companies have already approved the merger. Shareholders controlling 84.5 percent of CSAV’s shares voted on March 21 in favor of the deal.
CSAV and Hapag-Lloyd signed a non-binding memorandum of understanding in January following several months of behind-the-scenes negotiations.
The transaction’s closing is subject to approval of government competition authorities. Another condition is that not more than 5 percent of CSAV’s minority shareholders exercise their rights to withdraw by April 20.
-----FM JOC
