Hapag-Lloyd agrees merger terms with shipping peer UASC

FRANKFURT — German container shipping line Hapag-Lloyd AG has agreed a merger deal with United Arab Shipping Co. (UASC), creating a group with an estimated value of €7 billion to €8 billion ($7.7 billion-$8.9 billion), as both seek to weather a market downturn.

Hapag-Lloyd said its supervisory board had approved the deal, which would see it take all shares in Kuwaitbased UASC, majority-held by the government of Qatar. Hapag-Lloyd’s anchor shareholders and UASC shareholders still need to give consent.

An extraordinary general meeting of UASC will be held in Dubai on June 29, Hapag-Lloyd said in a statement.

Hapag-Lloyd shares were up by 3.4% at €18 at 1455 GMT, easing from an earlier high of €19.20.

Container shipping has seen a wave of mergers and acquisitions, particularly in Asia, as companies try to grab a bigger share of a depressed market. The industry is suffering its worst downturn since its origins in the 1950s and 1960s due to a combination of weak consumer demand and overcapacity.

Plans for the deal were unveiled in April. It received backing by UASC shareholders earlier this month.

Hamburg-based Hapag-Lloyd initially said talks were based on its shareholders owning 72% of the combined business.

In a presentation to analysts last month, Hapag-Lloyd placed itself fifth globally in terms of carrier capacity and UASC in eleventh place.

A merger would consolidate the group’s combined 5th place and get it much closer to the number four — COSCO Container Lines — according to the presentation. —