Hapag-Lloyd AG (Hapag-Lloyd) and United Arab Shipping Company (UASC) have signed a business combination agreement (BCA) to merge both companies, subject to the necessary regulatory and contractual approvals.
Apart from the BCA, the controlling shareholders, namely CSAV Germany Container Holding GmbH, HGV Hamburger Gesellschaft für Vermögens- und Beteiligungs management mbH and Kühne Maritime GmbH on the side of Hapag-Lloyd, and Qatar Holding and The Public Investment Fund (PIF) of Saudi Arabia on the side of UASC, have assumed certain commitments with regard to the merger and the future equity funding of the company in a separate shareholders support agreement (SSA).
In the SSA, some of the controlling shareholders of either side have committed to backstop a cash capital increase in the amount of $400 million planned by way of a rights issue within 6 months after the closing of the transaction, said a statement from UASC.
Following the integration, the new Hapag-Lloyd will rank among the five largest container shipping lines in the world, with 237 vessels and a total transport capacity of around 1.6 million TEU, an annual transport volume of 10 million TEU and a combined turnover of $12 billion, it stated.
The combined company will remain a registered and stock listed company in Germany with its head office in Hamburg. CSAV, HGV (City of Hamburg) and Kühne Maritime will remain controlling shareholders of Hapag-Lloyd.
The majority shareholders of UASC - Qatar Holding and the Saudi PIF - will become new key shareholders of Hapag-Lloyd holding 14 per cent and 10 per cent respectively.
Speaking at the signing ceremony, Rolf Habben Jansen, CEO of Hapag-Lloyd, said: "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."
"Furthermore it will give the new Hapag-Lloyd access to Ultra Large Container Vessels," he noted.
“After the successful integration of CSAV which was concluded mid of 2015 this transaction with UASC is another historic milestone for Hapag-Lloyd. The merger reinforces our position as a top 5 and one of the largest truly global carriers in liner shipping,” he added.
According to UASC, the combined company will have a global, diversified trade portfolio, with leading product offerings in the major East-West and North-South trades.
In addition, it will leverage on UASC´s solid presence in Middle Eastern markets and trades, with a commitment to further strengthening this presence by establishing a fifth Hapag-Lloyd Regional Center in Dubai, it stated.
“With this merger, we are embarking on an exciting new phase of UASC´s growth,” remarked Jorn Hinge, the president and CEO of UASC.
“Leveraging on UASC´s heritage in the Middle East as well as our recent growth in other markets, the combined company will provide customers with valuable expertise and very efficient service offerings in all major trade lanes and markets around the world”, he added.
The fleet of the combined company will consist of 237 ships – including UASC´s six recently received 18,800 TEU ships, known for their superior eco-efficiency credentials, as well as eleven newly built 15,000 TEU ships, the last of which will be delivered soon.
With an average age of 6.6 years and average size of 6,600 TEU the combined company will have one of the most modern and efficient vessel fleets in the industry.
The company will be the key player in the new “The Alliance” – consisting of Hanjin, Hapag-Lloyd, K-Line, Mitsui O.S.K Lines, Nippon Yusen Kaisha and Yang Ming. THE Alliance is scheduled to begin operation in April 2017 and will cover all East-West trade lanes including Asia-Middle East/Arabian Gulf and Red Sea.
Michael Behrendt, the chairman of the supervisory board of Hapag-Lloyd, said: "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 400 million US Dollars and save a significant amount of capital expenditure for the company," he added.
Dr Nabeel Al-Amudi, the chairman of the UASC board, said: "During its 40-year history, the Dubai company has grown from a regional carrier to become a truly global one with comprehensive coverage of the main trade lanes and a state-of-the-art fleet."
"We are very proud of UASC´s achievements over the years that paved the way for such a remarkable deal," he stated.
Following regulatory and contractual approvals, the merger is expected to be completed by the end of 2016, he added.