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Tuesday, May 2, 2017

Maersk, Hamburg Süd Boards Approve Merger

By Mark Edward Nero

The sale and purchase agreement for shipping company Maersk Line’s acquisition of rival Hamburg Süd was approved by the boards of Maersk Line and the Oetker Group on April 28. The acquisition still remains subject to regulatory approvals.

Maersk Line is to acquire Hamburg Süd for $4 billion USD cash. Maersk has said it will finance the acquisition through a syndicated loan facility.

“Today, we have taken a decisive step toward the shared future of Maersk Line and Hamburg Süd. We have confirmed the anticipated synergies and we are convinced that our plan to maximize customer retention is the right path forward. The acquisition is cementing our position as the largest and leading carrier in container shipping, and it will provide great opportunities for the employees of both companies,” Maersk Line and A.P. Moller – Maersk CEO Søren Skou said in a statement.

Combined, the two companies are expected to earn $350-400 million USD annually over the first couple of years following completion of the transaction, Maersk said.

Following the sale, Hamburg Süd is expected to maintain its own structure, and the combined network will include increased number of weekly sailings, faster transit times, more port calls, more direct port-to-port calls and less need for transhipment, benefitting both Maersk Line and Hamburg Süd customers.

“By keeping Hamburg Süd as a separate and well-run company, we will limit the transaction and integration risks and costs while still extracting the operational synergies. The acquisition of Hamburg Süd will therefore create substantial value to Maersk Line already in 2019,” Skou said.

With the acquisition, Maersk Line and Hamburg Süd will have a total container capacity of around 3.9 million TEU and an 18.7 percent global capacity share. The combined fleet will consist of 743 container vessels.

The US Department of Justice approved the proposed acquisition in March, and in April, the EU Commission approved it as well, subject to conditions.

Maersk Line said it expects to close the transaction by the end of 2017 and that until then, Hamburg Süd and Maersk Line would continue business as usual as separate and independent companies.