Home / News / COSCO to Join Bid to Take Over Hong Kong Shipping Giant OOCL – Caixin

COSCO to Join Bid to Take Over Hong Kong Shipping Giant OOCL – Caixin

Chinese shipping giant COSCO will join a bid to take over OOCL, its largest Hong Kong-based rival, with other bidders belonging to a new maritime alliance that starts operating in April — one that could reshape the global shipping industry.
The state-owned China COSCO Shipping Co. Ltd. will compete with Evergreen Marine Corp. from Taiwan and France’s CMA-CGM SA in the takeover bid, but COSCO was more likely to win the deal, a source from COSCO told Caixin.

However, the COSCO spokesperson told Caixin on Tuesday night that he hadn’t been informed of the deal.

Orient Overseas Container Line (OOCL) is the ninth-largest shipper in the world in terms of cargo-carrying capacity, which accounted for 2.8% of the entire global industry, according to shipping data provider Alphaliner.

Hong Kong-based OOCL, founded in the 1930s by Tung Chao-yung — father of the city’s first chief executive, Tung Chee-hwa — has now expanded its shipping routes across Asia, Europe, North America and Australia.

But the sluggish market in recent years has caused its listed parent company, Orient Overseas (International) Ltd. (OOIL), to report a loss of $76.3 million in the first half of 2016 after recording a profit of $215.7 million in the same period the previous year.

However, shares in OOCL have rebounded recently amid market rumors about its potential sale, with its shares surging by 31% on Wednesday from the last trading day of 2016.

The possible takeover of OOCL by one of the three bidders — COSCO, CMA-CGM and Evergreen — would happen within the new Ocean Alliance co-founded by the four, which will start operating this April. The alliance will last for five years, allowing members to share container ships, ports and other resources and information.

The new setup, the world’s largest in terms of capacity, will shake up the global shipping industry, which currently consists of four major alliances: Ocean Three, G6, CKYHE, and 2M.

The Ocean Three group will end, as two members, CMA-CGM and China Shipping (Group) Co., join the new alliance. The latter was a shipper’s name before it merged with China Ocean Shipping (Group) Company to form COSCO.

The G6 group will see its market share drop as members, APL — which was acquired by CMA-CGM in June 2016 — and OOCL will drop out.

CKYHE will also lose two members, the China Ocean Shipping (Group) Co. and Evergreen.

Source: caixinglobal.com