Hapag-Lloyd and the United Arab Shipping Company (UASC) have signed a Business Combination Agreement (BCA) to merge and assumed commitments related to the merger in a separate Shareholders Support Agreement (SSA).
The merger, which is subject to regulatory and contractual approvals, is expected to be completed by the end of 2016.
UASC’s majority shareholders, Qatar Holding LLC and The Public Investment Fund of the Kingdom of Saudi Arabia, will become new shareholders of Hapag-Lloyd holding a stake of 14% and 10% respectively.
The combined entity will remain a registered and stock listed company in Germany with its head office in Hamburg, with CSAV, HGV (City of Hamburg) and Kühne Maritime remaining controlling shareholders of Hapag-Lloyd.
The merged entity will have 237 vessels for a total transport capacity of around 1.6m teu, with an US10m teu annual transport volume and a US$12bn combined turnover.
According to a statement, as part of the SSA agreement, some of the controlling shareholders of either company committed to backstop a US$400m cash capital increase “planned by way of a rights issue within six months after the closing of the transaction”.
Michael Behrendt, chairman of the Supervisory Board of Hapag-Lloyd, said in a statement: “Hapag-Lloyd and UASC now take the next step to further consolidate and shape the liner shipping industry.
“The new transaction is strengthening not only our market position, but also our service portfolio. The merger will create annual net synergies of at least US$400m and save a significant amount of capital expenditure for the company.”
Until completion of the merger, Hapag-Lloyd and the UASC will continue to operate as stand-alone companies.
Each company will continue operating in its own alliance, G6 for Hapag-Lloyd and Ocean Three for the UASC, until the end of March 2017, when the recently-formed “THE Alliance” will start operations.
“This strategic merger makes a lot of sense for both carriers – as we are able to combine UASC’s emerging global presence and young and highly efficient fleet with Hapag-Lloyd’s broad, diversified market coverage and strong customer base,” Rolf Habben Jansen, CEO of Hapag-Lloyd.
“Furthermore it will give the new Hapag-Lloyd access to Ultra Large Container Vessels.”