There has been massive speculation in recent months, culminating this Sunday when Cosco Shipping announced that the Chinese major player would take over the Hong Kong firm OOCL for USD 6.3 billion.
In a corporate statement, Cosco Shipping Holding writes that the new major carrier will operate a fleet of more than 400 container ships with capacity of more than 2.9 million teu when the orderbook is included. The new carrier will be the world's third-largest container carrier and thus knock CMA CGM out of the top three."The Offer is dependent upon the satisfaction of pre-conditions, which include the necessary regulatory approvals as well as approval from COSCO SHIPPING Holdings shareholders. The controlling shareholders who currently holds 68.7% of OOIL has irrevocably undertaken to accept the Offer," writes Cosco Shipping Holding.
The controlling stakeholders are the Tung family, who have previously rejected an acquisition but have now approved this deal.
"We are proud of the business we have built and the people who have been building it. This decision has been carefully considered and we believe it helps ensure the future success of OOIL. We are confident that COSCO SHIPPING Holdings is the right partner for us," says Andy Tung, Executive Director of OOIL, about the acquisition.
The takeover of OOCL, which held the seventh spot on the ranking of the world's largest container carriers, is the most recent event in the container industry, where massive consolidation has taken place over recent years.
"The acquisition of Orient Overseas further strengthens Cosco's market position and gives it the critical mass to compete with the very top players in every respect," says Basil Karatzas, Chief Executive of Karatzas Marine Advisors in an interview with Financial Times, adding:
"There is little doubt that Cosco likely will not be done and is likely to go after more targets in the near future."
The acquisition will give new strength to Cosco on services where the company has been played a dominant role in the past.
"Cosco can benefit from OOCL's strong presence on routes from the Far East to Australia and to the U.S. The company's operational efficiency has long been admired by outsiders as well," says Han Ning, China director for Drewry Shipping Consultants Ltd., to Bloomberg.
English Edit: Gretchen Deverell Pedersen