Hapag-Lloyd and United Arab Shipping Company (UASC) have merged – creating a fleet of 230 vessels and 1.6 million teu – and boosting Hapag-Lloyd’s position as fifth largest liner shipping company globally.
Hapag-Lloyd will remain a publicly traded company registered in Germany with its headquarters in Hamburg.
“This is an important strategic milestone and a big step forward for Hapag-Lloyd,” said Rolf Habben Jansen, chief executive of Hapag-Lloyd. “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.”
The business combination agreement (BCA) had already been signed in Hamburg 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.
At the centre of the integration is the combination of 118 Hapag-Lloyd services with the 45 services making up UASC’s network. Hapag-Lloyd said in a statement that this process will start in roughly eight weeks and will take until the end of the third quarter, once the new employees from UASC have been trained to use Hapag-Lloyd systems. After that UASC’s present transport volume will be handled on Hapag-Lloyd’s IT platform. The combined entity will thereby carry an estimated annual transport volume in excess of 10 million TEU.
UASC’s 58 vessels will be integrated into the fleet of Hapag-Lloyd. The combined fleet will then include a total of 230 vessels and be one of the youngest in the industry, with an average ship age of only 7.2 years. The average size of the vessels in Hapag-Lloyd’s new fleet will be some 6,840 teu/vessel, which the carrier said was approximately 30 per cent larger than the average of the top 15 in the industry (5,280 teu/vessel).
Hapag-Lloyd plans to achieve annual synergies of US$435 million as a result of the merger. A significant portion of these savings should be realised in the course of 2018, while the full amount is expected to first be reached in 2019. In addition to the synergies we expect that it will not be necessary to make sizeable investments in newbuildings over the next few years.
Hapag-Lloyd will establish a new regional headquarters for the Middle East. This will add a fifth region to the existing regions North America, Latin America, Asia and Europe.
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. The other UASC shareholders are the Kuwait Investment Authority on behalf of the state of Kuwait, the Iraqi Fund for External Development (IFED), the United Arab Emirates and Bahrain, which will be reflected with a combined 3.6 per cent of the shares of Hapag-Lloyd as free-float shares.
Within six months after the closing, a cash capital increase by way of a rights issue is planned for Hapag-Lloyd to strengthen the company. It said that this will be secured via a backstop commitment of US$400 million that some of the controlling shareholders have agreed to. At the annual general meeting of Hapag-Lloyd, to be held on 29 May in Hamburg, shareholders will be asked to approve a corresponding appropriate authorised capital.
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