By Mark Edward Nero
Two car carrier companies, Norway-based Wilh. Wilhelmsen Holding and Wallenius Lines of Sweden said Sept. 5 that they’ve signed a letter of intent to establish a new, combined ownership structure.
The new entity, Wallenius Wilhelmsen Logistics ASA will, the companies said in a statement, “form a more efficient management structure and enable further synergies between the joint ventures.”
The letter of intent states that the parties will combine their ownership in three jointly owned entities: shipping company Wallenius Wilhelmsen Logistics (WWL) and American Roll-on Roll-off Carrier, of which they will own 100 percent; and EUKOR Car Carriers, of which they would jointly own 80 percent.
The parties have also agreed to merge the ownership of the majority of their vessels and affected assets and liabilities.
“Changing market dynamics and pressure on margins enforce a fundamental change in how we manage our joint ventures, especially within the shipping segment,” Wilh. Wilhelmsen ASA Chair Thomas Wilhelmsen and Wilh. Wilhelmsen Holding ASA Chair Diderik Schnitler said in a joint statement regarding the reasoning behind the proposed changes.
“The markets in which the jointly owned entities operate are going through rapid change and require a more agile and efficient business model,” Wilh. Wilhelmsen ASA President and CEO Jan Eyvin Wang explained. “In addition to establishing a common owner and governance structure, the proposed merger is expected to enable synergies between $50-100 million by combining the assets and harvesting economies of scale, including more optimal tonnage planning, and administrative, commercial and operational efficiencies between the entities.”
The final terms and ownership level are expected to be confirmed with the announcement of a final agreement by year’s end. The proposed transaction is expected to close in the first quarter of 2017.