Cosco Shipping to acquire OOIL

OOCL

The waiting is over, six months of speculation has come to an end, Orient Overseas International will, bar the shouting, become part of Cosco Shipping Holdings very shortly.

On Sunday a joint press release from Cosco Shipping, OOIL and Shanghai International Port Group, revealed that a hard to refuse offer of HK$78.67 per share had been made for Hong Kong’s iconic liner and logistics firm.

The obligatory regulatory and shareholder approval is not expected to present any difficulties. The Tung family, which holds 68.7% of OOIL, has already undertaken to accept the offer. The price represents a 31.1% premium on Friday’s closing price of HK$60 and places a value on the company of around $6.3bn. Analysts had expected a price closer to $5bn to be on the table.

The details of the offer reveal the intent that Cosco Shipping will hold 90.1% of OOIL with the remaining 9.9% to be held by SIPG.

The combined Cosco Shipping Lines, a subsidiary of Cosco Shipping Holdings, and OOIL will operate more than 400 vessels over a much expanded yet well-structured network, with capacity exceeding 2.9m teu including orderbook. As such the new entity leapfrogs CMA CGM to become the world’s third largest liner company.

At least initially, it will be business as usual, minue the executive at OOIL, management at Cosco Shipping Holdings (parent of Cosco Shipping) have indicated. The joint press release said: “The joint offerers intend 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 the trnsaction for at least 24 months. Besides that, the joint offerers intend to maintain OOIL’s global headquarters functions and presence in Hong Kong, and utilise the advantage of both companies’ global network to contribute to the economic prosperity of the territory and development of Hong Kong as an internatiobnal shipping centre.”

“We respect OOIL’s management team and its expertise, not to mention its people, brand and culture,” said Mr Wan Min, chairman of Cosco Shipping Holdings. “Our company remains committed to enhacing Hong Kong as an international shipping centre. 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 concluded.

Andy Tung, execitive director of OOIL, said: “We are proud of the business we have built and the people who have been building it. This decision has been carefully considered and w believe it helps ensure the future success of OOIL. We are confident that Cosco Shipping Holdings is the right partner for us.”

 

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