Hapag-Lloyd and United Arab Shipping Company (UASC) discuss development of further forms of cooperation, including potential merger. The both companies confirmed the merger talks and explained that the talks were based on its shareholders owning 72% of the combined business and UASC’s shareholders the remaining 28%. The both companies started negotiations in extension of the partnership, on the background of delaying container shipping business, overcapacity and record low freight rates. The talks between the both companies are in advanced stage, but currently far away from final contraction. In case of successful merger, the combined shipping company will have an estimated market capitalization of 9 billion USD.
“In case of a business combination, the parties are basing their discussions on a relative valuation of the two businesses at 72% (Hapag Lloyd) and 28% (UASC), subject to a mutually satisfactory completion of the negotiations and the mutual due diligence exercise”, the two companies said in an official joint statement. “To date, the discussions conducted between the two carriers have not resulted in any binding agreement and no assurance”, adds Hapag-Lloyd to the statement.
The merger is part of a consolidation wave in the industry, after formation of several large shipping alliances and large acquisitions. The latest shipping acquisition between CMA CGM and NOL, which is waiting for the anti-trust approval. Just a few days ago, CMA CGM headed the Ocean Alliance together with Cosco, Evergreen and OOCL. Hapag-Lloyd still remains in G6 Alliance, which includes also HMM, MOL and NYK.
Hapag-Lloyd is a German transportation company comprising a cargo container shipping line, which is the world’s fifth largest container carrier in terms of vessel capacity. It operates a fleet of 177 container ships and after the merger with CSAV the container business the group reached capacity of 1.6 million TEU and including one of the world’s largest reefer fleet.
United Arab Shipping Company (UASC) is created jointly by six shareholding Arab states of the Persian Gulf. It is largest global shipping company in the Middle East. UASC operated 60 ships with capacity of over 0.56 million TEU.