China's COSCO Shipping has offered to buy Orient Overseas International (OOIL) for about HK$49 billion ($6.3 billion). If the deal goes ahead, COSCO will obtain OOIL subsidiary OOCL and displace CMA CGM to become the world's third largest container liner after Maersk and MSC.
COSCO currently has a container shipping market share of 8.4 percent and Orient Overseas has 3.2 percent, according to Alphaliner. Their combined 11.6 percent share would exceed that of CMA CGM with 11.2 percent.
COSCO will end up with a fleet of more than 400 vessels and capacity exceeding 2.9 million TEUs. The companies have said that they plan to retain OOIL's listing status and maintain its global headquarters and presence in Hong Kong.
"COSCO Shipping Holdings believes this acquisition will enable both COSCO Shipping Lines and OOIL to realize synergies, enhance profitability and achieve sustainable growth in the long term," COSCO said in the statement.
On completion of the deal, COSCO Shipping will hold 90.1 percent of Orient Overseas, with Shanghai International Port holding the remaining 9.9 percent. The deal is subject to anti-trust reviews by Chinese and U.S. government authorities.
Both companies are part of the Ocean Alliance partnership, which also includes CMA CGM and Evergreen Marine. A growing number of container shipping company mergers has left the top six shipping lines controlling 63 percent of the market.