ShippingWatch

Cosco buys OOCL for USD 6.3 billion

Chinese shipping giant Cosco Shipping has made a USD 6.3 billion bid on Hong Kong carrier OOCL. Should the deal be approved, it will create the the world's third-largest container carrier.

Photo: PR-foto/Hamburg Hafen Marketing Association

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.

New strength

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

Cosco expects profits in the first half of 2017

Cosco Shipping secures financing for tanker vessels

Cosco will challenge European dominance on key container routes

Frontpage right now

Søren Skou: Transformation of Maersk is complex

Maersk Group CEO Søren Skou does not hide the fact that Maersk's transition is a lot to handle and a complex task. And while he is not satisfied with the financials yet, he promises investors that good results are coming.

Golden Ocean hopes green regulations can offset bulk fleet growth

The dry bulk market has improved, and this has prompted the order book for new ships expand and potentially strain competition in the years to come. Golden Ocean hopes that the environmental regulations hitting the sector in the years to come will result in more ships being scrapped, says the carrier in its annual report 2017.

One alliance accounts for majority of bulging order book

The members of one container alliance in particular have been busy ordering new vessels in the past six months. Looking at ships of more than 16,000 teu, this alliance accounts for 58.6 percent of the orders, writes SeaIntel in a new analysis.

Related articles

Latest news

Jobs

See all

See all