Hapag-Lloyd, UASC one step closer to merger

German ocean carrier Hapag-Lloyd reached an agreement with United Arab Shipping Company on a merger that would make Hapag-Lloyd the fifth largest container carrier in the world.    German ocean carrier Hapag-Lloyd announced Tuesday it has reached an agreement with United Arab Shipping Company (UASC) on a merger that would make Hapag-Lloyd the fifth largest container carrier in the world.
   The business combination agreement would provide for the contribution of all shares in UASC to Hapag-Lloyd.
   The combined companies are seen as a good match because of UASC’s strong presence in the Middle East where Hapag-Lloyd currently depends on agents. UASC shareholders, which consist of six countries in the Middle East, would become major shareholders in a long established global carrier.
   UASC has been an aggressive builder of large new ships, and a combination will increase the average size of ships in Hapag-Lloyd’s fleet and lower the average fleet age.
   Hapag-Lloyd first revealed it was discussing a possible combination with UASC back in April.
   According to ocean liner schedule and capacity database BlueWater Reporting, the German carrier currently operates a fleet of owned and chartered ships with a combined 1,042,343 TEUs of capacity, while UASC has a combined fleet of 543,568 TEUs, making them the fifth and thirteen largest container carriers in the world, respectively.
   The combined fleet of 1.59 million TEUs would push a merged Hapag-Lloyd/UASC into the fifth place spot among carriers in terms of capacity, larger than Evergreen, but still trailing behind Maersk, MSC, CMA CGM, which is in the process of acquiring APL parent Neptune Orient Lines, and China COSCO Shipping, the product of the recent merger of state-run Chinese carriers COSCO and China Shipping. The chart below, based off data gathered from ocean carrier scheule and capacity database BlueWater Reporting, compares the projected operating fleet capacity of each of the top 10 container lines following the abovementioned mergers and acquisitions.

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   Hamburg-based Hapag-Lloyd said its supervisory board approved the transaction “subject to the anchor shareholders of Hapag-Lloyd and UASC agreeing to assume the commitments levied upon them in the BCA.”
   Since both companies are controlled by a small number of shareholders, the deal is expected to be completed rapidly.
   Hapag-Lloyd’s major shareholders include Chile’s CSAV, which merged its container operations with Hapag Lloyd in 2014, with 31.4 percent; HGV, the City of Hamburg’s investment company, with 20.6 percent; transportation maganate Klaus Michael Kuhne, 20.2 percent; and the tourism company TUI, which once owned Hapag-Lloyd, with 12.3 percent.
   Conclusion of binding agreements is still subject to the consent of UASC shareholders, which consists of investment companies of governments of six countries. Qatar owns about 51 percent, flowed by Saudi Arabia at about 36 percent, and with smaller stakes held by Kuwait, Iraq, the United Arab Emirates and Bahrain. An extraordinary general meeting of UASC to grant such consent will be held in Dubai on Wednesday, June 29.