The ‘new Hapag-Lloyd’ unveiled in merger agreement with UASC

Hapag-Lloyd and United Arab Shipping Company (UASC) have officially signed the agreement that will see the Dubai-based line’s operations merged into those of the German shipping giant.

Included is a plan for a $400m cash capital injection, by way of a rights issue, within six months of the proposed transaction.

The future equity funding of the mega marriage is among the key developments unveiled in a just released Business Combination Agreement (BCA) and separate Shareholders Support Agreement (SSA).

The combined entity, interestingly positioned as the “new Hapag-Lloyd”, will as expected remain a registered and stock listed company in Germany with its head office in Hamburg, subject to the necessary regulatory and contractual approvals.

Yesterday’s media release, providing the first concrete details of the nuptials, highlighted UASC’s solid presence in “Middle Eastern markets and trades” and the new company’s “commitment to further strengthening this presence by establishing a fifth Hapag-Lloyd Regional Centre in Dubai.”

Interestingly, Qatar Holding LLC (QH) and The Public Investment Fund of the Kingdom of Saudi Arabia (PIF), the majority shareholders of UASC, are poised to become “key” shareholders in the Hapag-Lloyd holding – albeit minority on paper given QH is poised to take a 14% stake and PIF just 10%.

CSAV Germany Container Holding GmbH, HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH (City of Hamburg) and, logistics billionaire Klaus Michael Kühne’s Kühne Maritime GmbH will remain controlling shareholders of Hapag-Lloyd.

Under the terms of the SSA, “some” of the controlling shareholders of either side have committed to backstop the $400m cash capital increase by way of the proposed rights issue.

Following the integration, the new Hapag-Lloyd will rank among the five largest container shipping lines in the world, with 237 vessels and a total capacity of approximately 1.6m teu, an annual transport volume of 10m teu and a combined turnover of approximately $12bn.

The fleet of the combined company – including UASC´s six recently received 18,800 teu ships and 11 newly built 15,000 teu boxships (the last of which will be delivered soon) boasts an average age of 6.6 years and average size of 6,600 teu.

“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 Hapag-Lloyd ceo Rolf Habben Jansen, describing the merger as another “historic milestone” for the German company following the successful integration of CSAV last year.

Pending 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.

It is the third major M&A transaction in container shipping in the last 12 months following CMA CGM’s buy out of Neptune Orient Lines (NOL), and the merger of Cosco Container Lines and China Shipping Container Lines (CSCL) as part of the wider merger of their parent companies.

Hapag-Lloyd has been repeatedly linked to a possible merger with NOL over the years but no deal has come to fruition.

 



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