MSC Completes Hamburg Tender as Acquisition of Port Operator HHLA Proceeds

 

MSC Mediterranean Shipping Company successfully completed the public tender offer for the operator of the Port of Hamburg clearing a critical hurdle to take the company private and proceed with the plan to manage the port with the City of Hamburg. While the deal still requires regulatory and political approval, most observers believe it is likely to be completed during the second quarter of 2024.

After the tender that closed on December 7, MSC now owns nearly 22 percent of the outstanding shares of Hamburger Hafen und Logistik Aktiengesellschaft (HHLA). Shareholders tendered a total of 9.74 percent of the outstanding Class A shares while MSC reports it acquired a further 12.21 percent on the open stock market. The city controls a further 70 percent of the shares of HHLA.

When combined with the MSC, the city and the shipping company’s subsidiary now control 92.3 percent, enough to prevent any blocking shareholders. The company will be able to proceed in the future with a squeeze-out to buy out the remaining shares and take HHLA private. The plan calls for the City of Hamburg to own 51 percent and MSC to own 49 percent of the company. Management control will remain with HHLA.

City leaders speak of the need to invest in port operations and modernize elements including terminal operations. They point to the increasing competition from ports including Rotterdam and Antwerp. To compete, they said Hamburg must automate and improve efficiency to handle and move cargo faster. 

MSC has entered into agreements with the city about the future of the port including a commitment for a near-term investment of €450 million. MSC has also promised to increase volumes through the port starting in 2025 and reaching one million TEU by 2030 as well as opening a regional office in Hamburg. They have also committed to no operational layoffs in the short term. 

MSC’s CEO Soren Toft told the German media, “We are in a very good position to advance our joint plan.” He said MSC and the city both seek to increase Hamburg’s competitive position to ensure it remains a leader in Europe. 

The deal faced opposition both from the unions and the political opposition after it was announced. There were protests in the city but while the deal remains controversial the opposition is not strong enough it appears to block the deal from going forward. Critics point to the controversial earlier deal for Chinese shipping company COSCO to purchase a stake in one of the terminals but Hamburg’s political leaders told the media there is a difference between a Chinese and a European company like MSC becoming a partner in the port.

As the world’s largest container carrier, Hamburg views MSC as an attractive partner for the port with a global reach. The city the fact that MSC through its terminal subsidiary operates over 70 terminals. The company has been growing its terminal and onshore logistics operations including a recent investment in the Italian railroads. HHLA is also growing its inland operations and network which MSC has pledged to support going forward.

Commenting on the status of the deal the city leaders said they are confident that the deal will receive regulatory approval. It also requires approval by the city’s parliament before the closing.