[240516.EN.SEA] Germany's Hapag-Lloyd In Merger Talks With United Arab Shipping Company

GERMANY's Hapag-Lloyd is in talks to merge with United Arab Shipping Company (UASC), representing the latest move in container shipping corporate consolidation, Reuters reports.

Hapag-Lloyd gave no details on the talks, saying there was no certainty of a deal, though a successful merger would create a group with an estimated enterprise value in the region of EUR8 billion (US$9 billion).

Kuwait-based UASC, owned by Gulf Arab states with Qatar holding the majority stake, was not available for comment.

"There is so much price pressure that all shipping groups are looking for mergers and this one won't be the last,?a transport banking source told Reuters.

"Hapag in particular had to look for a partner as it was left out of recent tie-ups and alliance regroupings. It was at risk of becoming a sub-scale player lacking the full range of destinations," said the banker.

however, a shipping industry source said it is unclear whether there would be sufficient benefit to UASC.

"Even with market pressure, it will take some convincing, given UASC's state ownership," the source said, adding that Hapag-Lloyd is likely to gain most from a tie-up.

This follows a takeover by France's CMA CGM of Singapore's Neptune Orient Lines to cement its position as the market's No 3 player behind Switzerland's MSC and Denmark's Maersk, the industry leader.

Also of recent vintage is the merger of state-controlled Chinese lines Cosco and China Shipping.

Container lines have also formed alliances aimed at saving costs and pooling runs to various destinations.

China Cosco Shipping and France's CMA CGM said that they had formed an alliance on Asia routes, making the partnership bigger in capacity than Maersk Line and MSC's rival 10-year agreement.

Maersk chief commercial officer Vincent Clerc said its arrangement with MSC is unaffected by its rivals' Asia announcement, adding that his company welcomes consolidation.

Source : HKSG.