China's COSCO Shipping to acquire Orient Overseas for $6.3 billion
10 July 2017
China's COSCO Shipping Holdings Co Ltd has teamed up with Shanghai Port Group, operator of the Port of Shanghai, to acquire smaller rival Orient Overseas International Ltd (OOIL) for HK$49.23 billion ($6.30 billion).
COSCO Shipping Holdings Co Ltd, a majority owned subsidiary of China COSCO Shipping Corporation Ltd, Shanghai International Port (Group) Co Ltd and Orient Overseas (International) Limited have jointly made a pre-conditional voluntary general offer to all shareholders of OOIL to acquire all issued OOIL shares at an offer price of HK$78.67 in cash.
On completion, assuming all OOIL shareholders tender their shares, COSCO Shipping Holdings will hold 90.1 per cent, while SIPG will hold 9.9 per cent of OOIL, the two stated in a joint release.
The offer is subject to necessary regulatory approvals as well as approval from COSCO Shipping Holdings shareholders. The controlling shareholder, who currently holds 68.7 per cent of OOIL, has irrevocably undertaken to accept the offer.
The transaction marks the latest consolidation in the global maritime industry. OOIL is the seventh largest container shipping company in the world, with extensive container shipping routes and networks.
The combined COSCO Shipping Lines and OOIL will operate more than 400 vessels over a much expanded yet well-structured network, with capacity exceeding 2.9 million TEUs, including orderbook. The combination will enhance the industry leading position of both companies as a whole.
Post closing, COSCO Shipping Lines and OOIL will continue to operate under their respective brands, providing container transport and logistics services. ''By leveraging the strengths of each company and achieving synergies, the businesses will enhance their operating efficiencies and competitive positions to achieve sustainable growth in the long term.''
The companies, both members of the Ocean Alliance, said they will continue to work together under this framework.
''We respect OOIL's management team and its expertise, not to mention its people, brand and culture,'' said Wan Min, chairman of COSCO Shipping Holdings. ''Our company remains committed to enhancing Hong Kong as an international shipping center. Following completion, we will continue to invest and strengthen our industry leadership, providing a more extensive platform for the employees of OOIL to excel,'' he added.
''We are proud of the business we have built and the people who have been building it. This decision has been carefully considered and we believe it helps ensure the future success of OOIL. We are confident that COSCO Shipping Holdings is the right partner for us,'' Andy Tung, executive director of OOIL, commented.
COSCO said the two planned to maintain OOIL's listed status following close of the offer, and are committed to retaining the existing compensation and benefit system at OOIL and will not terminate the employment of any employee at OOIL as a result of this transaction for at least 24 months after the close of the offer. Besides that, OOIL's global headquarters will continue to functions in Hong Kong, which will enable it to utilise the advantage of both companies' global network and Hong Kong's status as an international shipping center.
The board of directors of OOIL has established an independent board committee to advise the shareholders of OOIL in connection with the offer. An independent financial adviser will be appointed.
UBS AG is the financial adviser to the joint offerors and Paul Hastings is the legal adviser to COSCO Shipping Holdings, while UBS Securities is the independent financial adviser to COSCO Shipping Holdings. JP Morgan is the financial adviser and Slaughter and May is the legal adviser to OOIL.
Orient Overseas (International) Limited (OOIL) is a limited company incorporated in Bermuda and OOIL shares are listed on the main board of the Hong Kong Stock Exchange. OOIL is principally engaged in the provision of container transport and logistics services. Orient Overseas Container Line, a wholly owned subsidiary of OOIL, is one of the world's largest integrated international transportation, logistics and terminal companies, and is an industry leader in the use of information technology and e-commerce to manage the entire cargo transport process.