New owner COSCO to op­er­ate ship­pers as two brands un­der one group

China Daily (Hong Kong) - - BUSINESS - By DUAN TING in Hong Kong tingduan@chi­nadai­lyhk.com

Hong Kong’s No 1 con­tainer car­rier Ori­ent Over­seas (In­ter­na­tional) Lim­ited will re­tain its list­ing sta­tus and Hong Kong head­quar­ters as it joins a two­brands-un­der-one group model fol­low­ing its ac­qui­si­tion by COSCO Ship­ping Hold­ings, the com­pany an­nounced on Mon­day.

COSCO, the big­gest ship­ping com­pany on the Chi­nese main­land, an­nounced a month ago it was of­fer­ing HK$49 bil­lion ($6.27 bil­lion) to buy OOIL, which was founded by former spe­cial ad­min­is­tra­tive re­gion chief ex­ec­u­tive Tung Chee­hwa’s fam­ily in 1969. The pur­chase will cre­ate the world’s third-largest ship­ping line with more than 2.9 mil­lion stan­dard con­tain­ers and 400 ves­sels, sur­pass­ing French con­tainer, trans­port and ship­ping com­pany CMA CGM Group.

Alan Tung Lieh-Sing, chief fi­nan­cial of­fi­cer at Ori­ent Over­seas, said the ac­qui­si­tion was a care­ful and rea­son­able busi­ness de­ci­sion for share­hold­ers and the com­pany, and de­tails of the deal — in­clud­ing sell­ing as­sets and whether and how the Tung fam­ily would con­tinue serv­ing in man­age­ment po­si­tions — were still un­der ne­go­ti­a­tion. The deal needed at least six more months to be com­pleted.

State-owned COSCO of­fered HK$78.67 for each Ori­ent Over­seas share, a pre­mium of 37.8 per­cent over the clos­ing share price of HK$57.10 on July 9. Af­ter com­ple­tion of the deal, COSCO ship­ping will hold 90.1 per­cent of Ori­ent Over­seas while Shang­hai In­ter­na­tional Port Hold­ing will hold the re­main­ing 9.9 per­cent. COSCO ship­ping will be in talks with the Com­mit­tee on For­eign In­vest­ment in the United States on the of­fer, ac­cord­ing to Tung.

The ship­ping in­dus­try has been re­cov­er­ing prof­its and im­prov­ing per­for­mance but has faced sig­nif­i­cant in­dus­trial con­sol­i­da­tion amid changes in the de­mand and cap­i­tal At­lanta, en­vi­ron­ment world­wide in the past three years, ac­cord­ing to Tung. He be­lieves the cost of ship­ping trans­port and vol­umes will in­crease in the fu­ture and is pos­i­tive about devel­op­ment of the in­dus­try, which he be­lieves has gone through a trough. But he con­cedes the in­dus­try will find it hard to re­store the buoy­ant per­for­mance seen in 2000.

Ori­ent Over­seas re­ported net profit of HK$418 mil­lion in the first half of this year fol­low­ing a HK$442 mil­lion loss in the same pe­riod last year. Rev­enue in­creased 13.2 per­cent year-onyear to HK$22.6 bil­lion and op­er­at­ing profit amounted to HK$197.3 mil­lion. In­terim div­i­dend was 16.7 cents.

Dickie Wong, ex­ec­u­tive direc­tor of re­search at Kingston Fi­nan­cial Group, said the ac­qui­si­tion is a good re­sult for both the com­pa­nies and the ship­ping in­dus­try, and be­lieves the in­te­gra­tion of the two com­pa­nies will stim­u­late the group’s profitabil­ity, though he thinks it may take time for the two com­pa­nies to de­velop syn­er­gies.

BLOOMBERG

A crew­man on­board the a con­tainer ship of Ori­ent Over­seas Con­tainer Line, a sub­sidiary of OOIL, on the main deck at the Modern Ter­mi­nals area of the con­tainer port in Hong Kong.

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