COSCO Shipping Holdings Co Ltd has offered to buy Orient Overseas International Ltd (OOIL) (0316.HK) for HK$49.23 billion ($6.30 billion), in a deal that will see COSCO become the world’s third largest container liner.
The proposed deal is the latest in wave of mergers and acquisitions in global container shipping that sees the top six shipping lines controlling 63% of the market. OOIL’s shipping subsidiary, OOCL, has a 2.7% share of the market.
COSCO Shipping is offering HK$78.67 for each OOIL share, a premium of 37.8% over OOIL’s closing price of HK$57.10 on its last trading date, the companies said in filings with the Hong Kong and Shanghai stock exchanges on Sunday.
OOIL’s controlling shareholders agreed on July 7 to sell their 68.7% stake at that price to COSCO Shipping, which is making the offer with Shanghai Port International Group (SIPG) that will take 9.9%, they said.
COSCO Shipping will have a fleet of more than 400 vessels and capacity exceeding 2.9 million TEUs should the deal go through, it said.
This would make it the world’s third largest container shipping line after Denmark’s Maersk Line and Switzerland’s Mediterranean Shipping Company (MSC). It is currently the fourth-largest behind France’s CMA CGM.
“COSCO Shipping Holdings believes this acquisition will enable both COSCO Shipping Lines and OOIL to realise synergies, enhance profitability and achieve sustainable growth in the long term,” the Chinese group said in the statement.