The extended shares trading suspension of Cosco Shipping Holdings prompting media reports of an imminent acquisition of Orient Overseas Container Line (OOCL) have thus far turned out to be “unsubstantiated speculations” and an actual deal “is still far from certain to go through”, according to analyst Alphaliner.
Cosco announced on 1 July that the shares trading would continue to be suspended until further notice. The extended period of Cosco’s share trading suspension in Shanghai, now reaching its seventh week, suggested that a prospective acquisition of another publicly listed company is not the reason for the suspension, Alphaliner said.
“Any bid for Orient Overseas International Limited (OOIL) or OOCL would require immediate disclosure, given the publicly listed status of both companies and also to ensure that any news leaks that could affect the share price would not jeopardise a potential deal,” the specialist container shipping analyst said.
Cosco has consistently maintained that the shares suspension is due to the group “proposing to plan for certain material matters which involve the company”, and “such material matters constitute material asset restructuring based on discussion and negotiation among the parties.”
Alphaliner said Cosco’s restructuring is believed to involve an internal re-organisation that is unrelated to OOCL while the Cosco group’s overseas expansion efforts appear to be mainly focused on enlarging its global terminal footprint in support of China’s One Belt One Road initiative.
On the container shipping side, Cosco’s immediate growth would come from its massive newbuilding program comprising 34 new ships of 9,000-20,000 teu (three of which already delivered this year) that would cost over $4.2bn in total.
“Despite some media reporting that a Cosco-OOCL deal could be announced on 1 Kuly, to coincide with the 20th anniversary of Hong Kong’s handover to China, the date passed with little fanfare,” Alphaliner said.
Rumours about the marriage of Cosco and OOCL have circulated since January this year, and firmly denied by OOIL.
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