CP Ships agrees to TUI’s $2.3 billion offer

CP Ships agrees to TUI’s $2.3 billion offer    CP Ships has recommended that its shareholders accept Hapag-Lloyd parent company TUI AG’s offer of $21.50 per share, representing $2.0 billion on a fully diluted basis. Total value of the offer is $2.3 billion cash, including assumption of CP Ship’ net debt of $300 million as of June 30.
   Share prices in Gatwick-based CP Ships Friday jumped 3.1 percent to $19.60 on the New York Stock Exchange, following TUI’s confirmation on the same day that it was in talks with CP Ships about a possible takeover.
   “Having improved the performance of the business after a difficult 2004, the board undertook a review of our business and its potential opportunities. This transaction represents immediate and attractive value for our shareholders and the board has recommended it unanimously,” said Ray Miles, CP Ships’ chief executive officer.
   “We have so far grown only organically, without acquisitions. There are limits to this growth, however,” said Michael Behrendt, CEO of Hapag-Lloyd Container Line. “The planned acquisition of CP Ships now gives us the opportunity to expand our market position significantly and establish ourselves among the top five container shipping carriers worldwide.”
   CP Ships operates 38 services in 22 trade lanes in the transatlantic, Australasia, Latin America and Asia regions. In 2004 CP Ships carried 2.3 million TEUs. The company also owns Montreal Gateway Terminals.
   TUI said it plans to combine Hapag-Lloyd’s and CP Ships’ operations, creating a fleet of 139 ships with a capacity of more than 400,000 TEUs. The two carriers have 19 vessels on order.
   “Hapag-Lloyd believes its significantly increased size and presence in the world’s shipping lanes will increase its attractiveness to partners in alliances,” TUI said.
   Before the effects of consolidation, the combined shipping business would have had revenues of approximately $7.0 billion in 2004, CP Ships and TUI both said in a joint statement.
   “The combination of Hapag-Lloyd and CP Ships will create a company with the strength and scale to compete effectively in an industry where consolidation is changing the landscape,” Behrendt said.
   Subject to necessary regulatory approvals in Canada, the United States, Europe and certain other countries, both parties said they expect the transaction to be completed by the end of the year.