German box carrier Hapag-Lloyd announced it will now proceed with the integration of Chilean shipping company Compañía Sud Americana de Vapores (CSAV) after gaining approval of all the relevant global maritime authorities for the takeover.
In a statement released December 2, Hapag-Lloyd said the main processes of integrating CSAV’s container business into Hapag-Lloyd are expected to be completed by the end of the second quarter of 2015, leading to the creation of the fourth largest liner shipping company in the world.
Rolf Habben Jansen, chief executive officer of Hapag-Lloyd, said the merger will enhance their ability to compete by closing the gap to the top three of the industry, referring to Maersk Line, Mediterranean Shipping Co., and CMA CGM.
The company said the merger is expected to “result in many synergies,” including annual savings of at least US$300 million from network optimizations, improvements in productivity, and reductions in costs.
The joint entity will have around 200 vessels with a total capacity of about one million twenty-foot-equivalent units, transporting some 7.5 million TEUs every year, and will set up its fourth regional headquarters in Valparaiso, Chile. It expects annual revenue of around $12 billion, putting it among the “elite group of international shipping companies.”
“This is a big day for both companies. With Hapag-Lloyd’s strength in Asian traffic and on the North Atlantic, combined with CSAV’s strong position in Latin America, we will become the leading shipping company in this region—and thereby be able to offer our global customers an even more attractive network and wider range of products,” said Jansen.
He added that there will be no major changes to the way the companies work “until the transition to the Hapag-Lloyd systems towards the end of the first quarter 2015.”
Oscar Hasbún, CEO of CSAV, added that the merged corporation will now become “one of the most prominent players in the global container shipping industry” with a firm foothold in Latin America, including CSAV’s home market of Chile.
There are also plans to strengthen the company by raising capital of EUR370 million by December 31, 2014, in which CSAV will take a share of EUR259 million and Kühne Maritime, EUR111 million.
The ownership structure of Hapag-Lloyd AG will change as follows: CSAV will become Hapag-Lloyd’s biggest shareholder with 34% after the cash capital increase. The other shareholders are HGV (23.2%), Kühne Maritime (20.8%), TUI (13.9%), Signal Iduna (3.3%), HSH Nordbank (1.8%), M.M. Warburg (1.8%), and Hanse Merkur (1.1%).
CSAV, HGV, and Kühne Maritime have agreed to pool 51% of the shares in Hapag-Lloyd to discuss and make key decisions together in the future. Of this pool structure, CSAV owns a 50% participation, while HGV and Kühne Maritime will own 25% each.
The contracts for the merger of the two companies were signed back in April in Hamburg, Germany.
