Analysis: Damco a prime takeover target if Hapag-Lloyd looks for a forwarder
Spurred by a recent history of deal-making, 2017 was a transformational year for Hapag-Lloyd, and ...
The European Commission has cleared Maersk Line’s proposed acquisition of Hamburg Süd, subject to the German carrier terminating membership of five vessel-sharing alliances when the transaction closes.
The EC said that, having “examined the effects of the merger on competition” in the 17 tradelanes connecting Europe, it found it would have, “as initially notified, created new links between the previously unconnected entities” – namely Maersk Line and the five vessel-sharing agreements.
It said: “In order to address the commission’s concerns, Maersk offered to terminate the participation of Hamburg Süd in the five consortia.”
It said that this would “entirely remove the problematic links between Maersk Line and HSDG’s consortia that would have been created by the transaction”.
Morten Toft, Senior Legal Counsel in Maersk Line’s Competition Law team, welcomed the decision: “We are very pleased that the EU Commission has approved the proposed acquisition in phase one. The commitments, which we anticipated at an early stage, reflect the EU Commission’s traditional approach to consortia in the shipping industry.”
Meanwhile, Hamburg Süd issued a customer advisory which said: “We are pleased that this major hurdle has been taken.”
Hamburg Süd will withdraw from vessel-sharing agreements operating from North Europe and the Mediterranean to Central America and the Caribbean, the east and west coasts of South America and the Middle East.
The affected services are: Eurosal 1/SAWC (North Europe to Central America/Caribbean); Eurosal 2/SAWC (North Europe to west coast South America); EPIC 2 (North Europe to Middle East); CCWM/MEDANDES (Mediterranean to west coast South America) and MESA (Mediterranean to east coast South America).
Commenting on the withdrawal from the five tradelanes, Hamburg Süd offered this reassurance to customers: “Such withdrawal will only take place after closing of the transaction and subject to the normal duration and termination notices laid down in each of these agreements.”
It added: “For the immediate future it means business as usual as we will continue to service these trades.”
In the interim the EC said that a monitoring trustee would “ensure that no anti-competitive information is shared between these five consortia and the merged entity”.
Indeed, when Maersk announced on 1 December last year that it was to acquire Hamburg Süd, in a cash deal worth up to $5bn, it said it did not expect to close the transaction before the end of 2017.
And in Maersk Group’s 2016 results presentation on 8 February, chief executive Soren Skou would only say that the deal to acquire Hamburg Süd was “progressing well”.
In addition to the EU and the earlier clearance from the US Federal Maritime Commission, regulatory approval is still needed from China, South Korea, Australia and Brazil. In regard to the latter, Maersk confirmed it would sell its Brazilian subsidiary, Mercosul Line, to head off competition concerns.
Sao Paulo-based cabotage operator Mercosul deploys four 2,500 teu type vessels linking Brazil’s main ports and controls around 18% of the market, according to Alphaliner data. In contrast, Hamburg Süd subsidiary Alianca is estimated to have approximately 67% share of Brazil’s cabotage market.
According to media reports, bidders for Mercosul could include CMA CGM, MSC, Cosco and Hapag-Lloyd.
In regard to Hapag-Lloyd’s interest, the German carrier’s chief executive, Rolf Habben Jensen, told a 2016 results press conference in Hamburg on 27 March: “South America is an important market for us, so if there are opportunities to pick up business there, then we would in principle be interested.”