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COSCO – PIL: Become a family or remain friends?

Scenarios of PIL’s possible acquisition by COSCO have raised again, after Singamas’s sale of its largest container manufacturing factories to the Chinese giant. PIL’s 41% owned subsidiary Singamas took the crucial decision and all eyes are again on the Singapore-based carrier.

It’s not the first time that the two companies – COSCO and PIL – are involved in that kind of rumors.

As the relations between the two companies are warm enough, COSCO is considered to be the front-runner, in case of PIL will decide to seek for possible buyers. With an acquisition of PIL, COSCO would get much closer to MSC – second largest ocean carrier – in terms of TEUs capacity. We don’t know yet if that is enough for COSCO to make a more aggressive move in order to acquire PIL.

However, PIL has repeatedly denied that it is for sale. In that respect, PIL managing director SS Teo in a CNBC interview in November noted: “We are going to have more cooperation which we will announce soon. But so far, I think the relationship and cooperation is better when we are separate. Sometimes, when you’re friends, you worked together better, sometimes, when you are family, you may not work together so well.”

PIL seems to enjoy the strong relationships with the Chinese giant, but to prefer its independence for now.

It’s interesting to see the next COSCO’s steps. The third largest shipping company theoretically has two choices. The first – and probably the safe one – is to remain patient and keep taking the advantages from the close ties with PIL. The second one is to try to takeover PIL, making a proposal.

 

Author: Antonis Karamalegkos

 

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