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Hapag Llyod CSAV sign MoU For Merger Set To Become Fourth Largest Shipping Line

It was in the making for a while, but finally the proposed merger between Germany’s Hapag-Lloyd and Chile’s CSAV seems to have taken a definite step forward after the two shipping lines signed a Memorandum of Understanding (MoU) towards the end of the last month.

The non-binding MoU between the two companies opened the way for detailed negotiations. In its 15 years of search for a partner, Hapag-Lloyd has not reached this level of negotiations with anyone and even though executives of the German company stressed on the tentative nature of the talks, a due diligence process is already under way and is expected to take at least a couple of months.

If the initial round of negotiations is successful, the two companies will sign a binding agreement paving the way for creating the fourth largest container shipping line in the world with the vessel capacity of 1m teu, a global market share of 5.65%, and annual revenue of about $12bn.

The merger will also make CSAV the biggest shareholder in its German counterpart with a 34% stake in Hapag-Lloyd. The talks between the two companies are focused on raising net capital of €740m into the merged entity in two separate €370m trenches.

While the Chilean carrier will assume the responsibility of raising the required capital in the first phase, the second would follow a Hapag-Lloyd flotation on a stock exchange, which remains unidentified as of now, and will take place one year after the deal is closed.

But before that, a detailed integration process needs to be prepared and required approvals have to be sought from the concerned regulatory authorities. The proposed deal is concerned only with CSAV’s container business. Its other entities like dry and liquid bulk will remain Chilean concerns only.


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About Author Siddharth Sodha :

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Article Added on Monday, May 19, 2014
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