China’s COSCO Shipping Holdings and Shanghai International Port Group (SIPG) have made a pre-conditional voluntary general offer to acquire all issued Orient Overseas International Lines’ (OOIL) shares at an offer price of HK$78.67 in cash.
The offer, made to all shareholders of the world’s seventh largest container shipping line would total in USD 6.3 billion.
On completion, assuming all OOIL shareholders tender their shares, COSCO would hold 90.1%, while SIPG would hold 9.9% of OOIL.
OOCL said that the offer is dependent on the necessary regulatory approvals as well as approval from COSCO Shipping Holdings shareholders.
“The controlling shareholder, who currently holds 68.7% of OOIL, has irrevocably undertaken to accept the offer,” OOCL said.
“The transaction marks the latest consolidation in the global maritime industry. It is believed that the combination of COSCO Shipping Holdings and OOIL can deliver a stronger competitive advantage.”
The combined fleet of COSCO Shipping Lines, a subsidiary of COSCO Shipping Holdings, and OOIL would see more than 400 vessels operated over a much expanded network, with capacity exceeding 2.9 million TEUs including orderbook.
Once and, if the acquisition is completed, COSCO Shipping and OOIL would continue to operate under their respective brands, providing container transport and logistic services. As disclosed, as both companies are members of the Ocean Alliance, they would continue to work together under this framework.
“We respect OOIL’s management team and its expertise, not to mention its people, brand and culture,” said Wan Min, Chairman of COSCO Shipping Holdings.
“Our company remains committed to enhancing Hong Kong as an international shipping center. Following completion, we will continue to invest and strengthen our industry leadership, providing a more extensive platform for the employees of OOIL to excel.”
“ This decision has been carefully considered and we believe it helps ensure the future success of OOIL. We are confident that COSCO SHIPPING Holdings is the right partner for us,” Andy Tung, Executive Director of OOIL, commented.
“COSCO and SIGP intend to maintain OOIL’s listed status following close of the offer, and are committed to retaining the existing compensation and benefit system at OOIL and will not terminate the employment of any employee at OOIL as a result of this transaction for at least 24 months after the close of the offer,” a joint statement reads.
In addition, the duo said that they intend to maintain OOIL’s global headquarter functions and presence in Hong Kong.
Separately, the board of directors of OOIL has established an independent board committee to advise the shareholders of OOIL in connection with the offer, and it plans to appoint an independent financial adviser to that end.