Hapag-Lloyd, UASC Seek E.U. Deal Approval
Hapag-Lloyd and Kuwait-based United Arab Shipping Company (UASC) have submitted concessions aimed at securing E.U. anti-trust approval for their billion-euro merger.
The companies put in their offer on October 28, according to a filing on the European Commission website on Monday.
UASC is majority-owned by the government of Qatar. Hapag-Lloyd is in the process of acquiring United Arab Shipping Company after earlier acquiring CSAV.
The E.U.'s competition body, which did not provide details, will now seek feedback from customers and rivals before deciding whether to accept the concessions, demand more or open a full investigation. It will decide on the next step by November 23.
The merged company would be the fifth largest player globally in terms of carrier capacity, just behind COSCO Container Lines, with access to the important Asia to Europe trade route and trans-Atlantic and trans-Pacific routes.
Through the deal, Hapag-Lloyd gains access to bigger ships on the important Asia to Europe trade route. UASC for its part gets wider access to trans-Atlantic and trans-Pacific loops, where Hapag-Lloyd is strong.
Hapag-Lloyd expects to reap a third of targeted annual synergies of $400 million from its planned merger with UASC next year, and realize them fully from 2019.
The company swung into the red in the first half of this year.
The container shipping industry is suffering the worst slump for 50 years caused by overcapacity and weak global economic growth. Overcapacity and poor economic growth globally has left hundreds of ships idle in the industry's worst downturn since its origins in the 1950s and 1960s, causing the collapse in August of South Korea's Hanjin Shipping, then the world's seventh-largest container shipping company. Analysts expect capacity to worsen at least over the next three years.