Hapag-Lloyd and UASC finally merge

Hapag-Lloyd and UASC finally merge
Hapag-Lloyd's headquarters will remain in Hamburg

Hapag-Lloyd and United Arab Shipping Company (UASC) have merged, creating the fifth largest shipping line in the world with a shared fleet capacity of 1.6m teu.

It is hoped that the deal, which comes more than one year after discussions began, will deliver annual synergies of US$435m, making investments in new-buildings unnecessary for the next few years.

The two majority shareholders of UASC, Qatar Investment Authority, through its subsidiary Qatar Holding LLC, and the Public Investment Fund of the Kingdom of Saudi Arabia (PIF), will become new key shareholders of Hapag-Lloyd, with stakes of 14.4% and 10.1% respectively.

The German carrier will remain a publicly traded company with its headquarters in Hamburg.

Rolf Habben Jansen, CEO of Hapag-Lloyd, stated: “We now not only have a very strong market position in Latin America and the Atlantic, but also in the Middle East, where we will become one of the leading carriers.”

“Our priority now is a smooth and fast integration of UASC and Hapag-Lloyd,” he added.

The process to integrate the carrier’s combined 163 services is set to begin in eight weeks and will last until the third quarter of this year, after which UASC’s present transport volume will be handled on Hapag-Lloyd’s IT platform.

When UASC’s 58 vessels are integrated into Hapag-Lloyd’s fleet, the combined fleet of 230 vessels will have an average size of 6,840 teu, approximately 30% larger than the average of the top 15 shipping lines worldwide.

The German carrier is also set to establish a new regional headquarters in the Middle East, in addition to its current hubs in North America, Latin America, Asia and Europe.

The business combination agreement (BCA) had already been signed in July 2016. Since then roughly a dozen competition authorities across the world had to grant their approval. In addition, changes in the corporate legal structure were made and the consent of several banks was obtained.

The ownership structure of Hapag-Lloyd AG before a forthcoming US$400m cash capital increase, planned after the merger, is as follows: CSAV (22.6%), HGV (14.8%), Kühne Maritime (14.6%), Qatar Holding (14.4%), PIF (10.1%) and TUI (8.9%). The free float will amount to roughly 14.6%.

The shipping line most recently merged with Chilean carrier CSAV in 2014.