By Costas Paris
Maersk Line, an arm of Danish conglomerate A.P. Moeller-Maersk A/S, is looking to buy German peer Hamburg Süd, people with knowledge of the matter said, a deal that would help the world's leading container-shipping operator boost its presence in trades from Latin America to the rest of the world.
Maersk is interested in acquiring the entire Hamburg Süd business, which had $6.7 billion in revenue in 2015, not just picking up a few vessels, a person familiar with the matter said.
Hamburg Süd, the world's seventh-biggest container operator in terms of capacity, is part of the Oetker Group, a family-owned German conglomerate involved in shipping, banking, food and beverages. The Wall Street Journal last week reported that the Oetker family is discussing a sale of the shipping business, which may go on the block by the end of the year. A person involved in the matter said the family will likely make a decision on whether to sell this week.
Maersk Line, which moves about 15% of global seaborne freight, has publicly said it is looking for acquisitions to increase its market share during one of the most challenging times for the industry, with freight rates well below sustainable levels over the past two years.
Container ships that transport 95% of the world's manufactured products are struggling to emerge from one of the deepest ever down-cycles, marred by anemic global trade, and a glut of tonnage in the water.
Those conditions have kicked off a rare wave of consolidation, with many of the 20 biggest operators either joining alliances or merging to weather the crisis. France's CMA CGM, the third biggest player, last year bought Singapore's Neptune Orient Lines for $2.4 billion, and Japan's three largest shipping companies said in October they would merge their container operations.
These pairings have left Hamburg Süd and Israel's Zim Integrated Shipping Services Ltd. the only two liners left without a partner.
While Maersk has bought ships from distressed peers like Korea's Hanjin Shipping Co, which declared bankruptcy in August, its last full-scale acquisition was in 2005 when it bought P&O Nedlloyd.
"Hamburg Süd's strong presence in North-South trades makes it attractive to Maersk," said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting. "Maersk sees growth in refrigerated cargo like meat products from Brazil and Argentina and bananas from Ecuador, and teaming up with Hamburg Süd will give it a bigger footprint in that part of the world."
Hamburg Süd said it had nearly 6,000 employees at the end of 2015, and owned and chartered 130 container ships. According to data provider Alphaliner, the company has 3% share of global container capacity, with the ability to transport 600,000 containers. The value of its fleet is around $1.4 billion according to VesselsValue, another maritime data provider.
Hamburg Süd, which traces its roots back more than 100 years, previously explored a merger with German peer Hapag-Lloyd AG, but talks collapsed in 2013 over pricing and who would run the merged entity.
Write to Costas Paris at email@example.com
(END) Dow Jones Newswires
November 28, 2016 12:04 ET (17:04 GMT)
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