Economy

Cosco buys Orient Overseas for $6.3bn

Cosco buys Orient Overseas for $6.3bn”

A Cosco container is seen at the Noatum container terminal near Bilboa Spain June 14, 2017.

Shares in Orient Overseas International Ltd (OOIL) are set to open 24 percent higher on Monday after the Hong Kong container shipping line received a $6.3 billion offer from mainland Chinese giant COSCO Shipping Holdings Co Ltd.

The proposed deal is the latest in wave of mergers and acquisitions in global container shipping that has left the top six shipping lines controlling 63 per cent of the market.

Cosco now has a market share of 8.4 percent while Orient Overseas has 3.2 percent, according to Alphaliner.

Cosco, China's biggest container carrier, will pay shareholders of Hong Kong's No. 1 box mover HK$78.67 a share, a 31 percent premium over the stock's closing price July 7, it said in an exchange filing yesterday.

This would make it the world's third largest container shipping line after Denmark's Maersk Line and Switzerland's Mediterranean Shipping Company (MSC), according to Singapore-based transport research firm Crucial Perspective.

The combined entity will operate more than 400 vessels with capacity exceeding 2.9 million twenty-foot equivalent units, including order book. It is now the fourth-largest behind France's CMA CGM.

The family of Hong Kong's first Chief Executive Tung Chee-hwa founded OOIL, and still holds a 69% stake in the company. "We are confident that Cosco Shipping Holdings is the right partner for us".

Korean shipping giant Hanjin filed for bankruptcy previous year, while France's CMA CGM bought Singapore's Neptune Orient Lines. Shares of the company have rallied nearly 90 percent this year in Hong Kong, boosting its market value to $4.8bn. The company's Shanghai-listed shares have been suspended since May 16.

"After the completion of the offer, the joint offerers intend to retain the listing status of OOIL, and maintain OOIL's global headquarters functions and presence in Hong Kong and continue to support Hong Kong as a global maritime centre", the Chinese group said in the statement.



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