MSC Begins Offering to Acquire Shares of Hamburg Port Operator HHLA

MSC Mediterranean Shipping Company is moving forward with its offer to acquire half of the operating company for the Port of Hamburg, Germany as it looks to form a joint venture with the city designed to expand MSC’s operations in the port and enhance the port’s role in global trade. The company on Monday, October 23, released its offering documents to acquire the Class A shares of Hamburger Hafen und Logistik Aktiengesellschaft (HHLA) in a deal valued at €1.4 billion.

The German regulatory authority, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), approved the proposed terms of the acquisition clearing the first hurdle for the proposed acquisition to proceed, despite opposition from within Germany. MSC is offering €16.75 per share for all the Class A shares and would end up controlling 49 percent of the HHLA. The City of Hamburg would continue to hold its preferred shares giving it 51 percent ownership of the company. 

After the proposed transaction was announced in mid-September, it met with widespread opposition and protests primarily from German trade unions. There had been speculation of a possible competing bid but that did not proceed. The opponents still stand against the acquisition of the port operator by the Swiss-based company despite the arguments that it would enhance investments in the port and help it to respond to competition from Rotterdam and Antwerp as well as emerging ports including Valencia, Genoa, and Gdansk.

MSC committed to increasing its operations in the port expanding cargo throughput in HHLA terminals starting by 2025 and reaching a minimum of 1 million TEU from 2031. The company also committed to building a new office in Hamburg and employing between 500 and 700 people in Hamburg.

In the offering document, they write that “Both the City of Hamburg and MSC are committed to driving forward the strategic development of HHLA and the entire Port of Hamburg, thereby strengthening its relevance for the global logistics industry. To this end, MSC will support HHLA’s growth strategy by contributing its unique expertise and strengths to the joint venture.”

MSC has expressed confidence in its bid and the ability to enhance the port’s position in global trade. CEO Søren Toft said during a press conference that their offer was “very competitive,” and said they were confident in the outcome.

Hamburg has been experiencing stagnant growth in recent years in part pressured by the war in Ukraine which reduced the eastern trade volumes. Analysts cite a lack of investment in new technology as well as the pressure from emerging EU regulations including the requirement for shore power connections to reduce in-port emissions and to decarbonize operations across the port through the addition of new equipment. HHLA recently completed an investment by COSCO into one of its terminals in a strategic move to grow trade with China.

The German news outlet Handelsblatt asked MSC about the possibility of pursuing the concept of merging the operations of Hamburg, Wilhelmshaven, and Bremerhaven into a single overall company. The concept was proposed more than two years ago in Germany and won support from leading organizations such as the Kiel Institute for the World Economy, the newspaper highlights. MSC said that it was too early to think about longer-term strategic moves, but the newspaper highlights likely opposition from Klaus-Michael Kühne, who is a major investor in Hapag-Lloyd, and Thomas Eckelmann, the leading investor in Eurokai, which is a partner in Eurogate, which operates terminals including in Hamburg.

The newspaper speculates that MSC will finance the acquisition from the more than €63 billion cash it has on hand. Documents in Italy leaked last month showing that MSC had sales of more than €86 billion in 2022 and a net profit of more than €36 billion.

MSC reports in open market transactions it has already acquired 4.69 percent of the shares of HHLA and with the City, they control 75 percent of the share capital. The offering period will be open through November 20 and under German securities law, shareholders would have a further two weeks after the results of the offer are announced to accept the terms. The deal requires additional regulatory approval, and MSC reports they expect it will be completed in the second quarter of 2024.