Hapag-Lloyd, CSAV plan to create fourth-largest container carrier
Hapag-Lloyd and CSAV said they have signed a memorandum of understanding about combining their container shipping operations.
CSAV said, "The new company would become the world's fourth-largest
operator with a combined carrying capacity of about 1 million TEU,
transported cargo volume of nearly 7.5 million TEU per year, and combined
sales of nearly $12 billion annually. The expected synergies from this
business combination would be about $300 million annually."
In a statement late Wednesday, Hapag-Lloyd said, "The talks between Hapag-Lloyd and CSAV about combining the container liner shipping activities of CSAV with Hapag-Lloyd are going into the next phase. Both companies have signed a Memorandum of Understanding, which is not binding. As the next step, the due diligence will take place, after which a binding contract could follow."
CSAV, which is based in Chile, said in a letter to regulators that the MoU sets out the basis of which the two businesses would be combined; CSAV would become the largest shareholder of Hapag-Lloyd, with a 30-percent stake. The companies plan to have the combined company listed publicly.
CSAV would would sign a controlling agreement with HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement, a company controlled by the City of Hamburg, Germany (where Hapag-Lloyd is headquartered), and Kühne Maritime GmbH, a company controlled by the entrepreneur Klaus Michael Kühne. The three members of the agreement would have about 75.5 percent of the combined companies.
(Today the shareholders of Hapag-Lloyd are HGV Hamburger, 36.9 percent; Kühne Maritime, 28.2 percent; TUI — the German tourism company from which 79 percent of Hapag-Lloyd was spun off in 2012 — 22 percent; insurer Signal Iduna, 5.3 percent; HSH Nordbank, 2.9 percent; investment bank M.M. Warburg, 2.9 percent; insurer HanseMerkur Versicherungsgruppe, 1.8 percent.)
CSAV said the two companies "have agreed to develop a business plan that will extract synergies, enhance operational efficiency improvements, and renew the fleet of ships. For this, the transaction also includes two capital increases in the combined entity totaling €740 million ($1 billion) to be implemented within twelve months following the execution of the transaction.
"The first capital increase of €370 million would be subscribed in €259 million by CSAV within the one hundred days following the execution of the transaction. After this first capital increase and based on the assumptions of the transaction, CSAV would have a share stake close to 34 percent of Hapag-Lloyd. The second capital increase of an additional €370 million is expected to be part of the listing of Hapag-Lloyd in the stock exchange within the term of one year as from the execution of the transaction."
CSAV noted consummation of the transaction is subject to due diligence, and a final agreement would have to be approved by government authorities and "third parties that could be necessary."
CSAV said, "The (carriers) consider that these conditions should be accomplished, and the probable closing date should occur within a period of about six months."
The deal would not include CSAV's dry bulk, tanker, conventional reefer or car carrier businesses.
CSAV said its board will evaluate the need to hold a shareholder meeting to approve a capital increase to raise $200 million to complete the financing of the acquisition of the seven container ship carriers of 9,300 TEU currently under construction, concur to the capital increase with its committed amount of €259 million, and obtain resources need to close the transaction.
The parties first revealed they were talking about a possible merger in December. The merger talks occur as Chief Executive Officer Michael Behrendt is planning to step down at the end of June; Rolf Habben-Jansen, who has served as the CEO of Maersk affiliate Damco since 2009, will take over.