SHANGHAI: Chinese shipping giant COSCO has offered $6.3 billion to buy Hong Kong’s rival firm Orient Overseas International Ltd, which would make it one of the world’s largest container liners in an industry dominated by European players.
The move is the latest in a consolidation wave following the 2008 financial crisis, which led to too many vessels chasing too little cargo and shrinking freight rates.
Industry leaders are hoping the string of mergers will boost rates once more.
COSCO-OOIL would become the third-largest shipping player behind Danish conglomerate Maersk and Mediterranean Shipping Company, headquartered in Switzerland, if the takeover is given the green light.
The completion of the buyout will depend on approval from regulators and COSCO shareholders, the companies said in a statement.
Shares in OOIL were up 19 per cent in afternoon trading in Hong Kong on Monday, while COSCO rose five per cent.
State-owned COSCO said it will pay shareholders of the smaller privately owned OOIL HK$78.67 per share in cash, a 31 per cent premium over the stock’s last closing price, according to Bloomberg News.
OOIL, controlled by the family of former Hong Kong leader Tung Chee-hwa, has accepted the offer for its 68.7 per cent stake and is projected to make more than $4 billion out of the deal.
“This decision has been carefully considered and we believe it helps ensure the future success of OOIL,” said Andy Tung, the Hong Kong firm’s executive director, in a statement.
COSCO chairman Wan Min said the company remained “committed to enhancing Hong Kong as an international shipping centre”. — AFP
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