Maersk to sell oil tanker unit to A.P. Moller Holding

A.P. Moller-Maersk has made another move to free up resources in order to focus future growth on container shipping, ports and logistics by signing an agreement Wednesday to sell Maersk Tankers to APMH Invest, a subsidiary of A.P. Moller Holding.    Danish shipping conglomerate A.P. Moller-Maersk signed an agreement Wednesday to sell its Maersk Tankers subsidiary to APMH Invest, a subsidiary of A.P. Moller Holding, for $1.17 billion in an all-cash transaction.
   Closing is expected to take place in October and is not subject to merger control approvals, according to A.P. Moller-Maersk, which plans to use the proceeds to reduce debt.
   “The transaction entails a market upside provision regulating total payment should the product tanker market significantly improve with a rebound in vessel values before the end of 2019,” A.P. Moller-Maersk said.
   The company noted, however, that the purchase price will be adjusted in two scenarios:
     • If the tanker markets strengthen based on a fleet value accretion (purchase price adjustment). The adjustment is capped at $200 million, can be exercised once and expires on Dec. 31, 2019.
     • If APMH Invest sells vessels at a higher price than the purchase price and higher than an agreed upon hurdle rate (on-sale adjustment). The on-sale adjustment expires June 30, 2019 or if the purchase price adjustment is called, whichever is first.
   APMH Invest plans to set up an ownership group for Maersk Tankers’ fleet to include Japan’s Mitsui & Co. Ltd. and other potential partners, in which A.P. Moller Holding will be the majority shareholder, the company said.
   Maersk Tankers transports refined oil products across the globe and employs 3,100 people. Its fleet consists of 161 product tanker vessels, 80 of which it owns. Upon closing, it will continue trading as “Maersk Tankers.”
   For the second quarter of 2017, Maersk Tankers reported a loss of $483 million, driven down from a profit of $28 million for last year’s second quarter due to declining spot market rates and vessel impairments. The vessel impairments of $464 million were due to an expected continuation of the lower asset valuations.
   Meanwhile, revenues at Maersk Tankers fell 8.8 percent year-over-year for this year’s second quarter to $206 million.
   The sale of Maersk Tankers marks another step in A.P. Moller-Maersk’s strategy to free up resources and focus future growth on container shipping, ports and logistics, A.P. Moller-Maersk CEO Søren Skou said.
   Just last month, A.P. Moller-Maersk signed an agreement to sell Maersk Oil to French energy giant Total for $7.45 billion in a combined share and debt transaction. The deal is expected to close during the first quarter 2018 and has an effective date of July 1, 2017, Total said last month.
   A.P. Moller-Maersk said that structural solutions for its remaining companies under the energy division – Maersk Drilling and Maersk Supply Service – remain to be defined before the end of 2018.