UASC Shareholders Back Hapag-Lloyd Merger Talks
The Middle East container shipping group United Arab Shipping Co. (UASC ) met with shareholders at the company's corporate office in Dubai to discuss a possible combination with German rival Hapag-Lloyd, but no decision was finalized.
According to sources, Shareholders in Ocean carrier were supportive during extraordinary general meeting (EGM), but no decision on merger.
"While the shareholders' representatives at the EGM were generally supportive of the ongoing discussions with Hapag-Lloyd and recognised the strategic value of a potential combination of both businesses, no formal vote was held today on this topic since the full agreement has not been finalised," UASC said in a statement.
Last week, Hapag-Lloyd postponed its annual general meeting, which was scheduled for June 1, to a later date due to the ongoing merger talks with UASC.
The plan to merge comes at a time when container lines are struggling with a glut of overcapacity and weak demand.
The two companies are said to be basing negotiations on relative business valuations of 72 percent for Hapag-Lloyd, and 28 percent for UASC - a combination that would create the world's fifth-largest container shipping group with 7.2 percent of global capacity, according to Alphaliner data.
Founded in 1967, UASC is owned by a half dozen countries in the Middle East. In 2014, Qatar increased its ownership in the company to 51.27 percent, according to an Federal Maritime Commission document. The minority owners are the United Arab Emirates, Bahrain, Saudi Arabia, Iraq and Kuwait.
Last month Hapag-Lloyd formed a new alliance with five Asian competitors as rivals team up to cut costs in the worst downturn the industry has ever seen.
The new alliance is dubbed as the third carrier alliance, The Alliance, set to enter the market in 2017. These include Hanjin, “K”Line, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Yang Ming. UASC is anticipated to become part of The Alliance once the merger talks are concluded.
