Maersk still weighs in as the world's largest container shipping line
Maersk Line has consolidated its position as the world’s largest container carrier, increasing its lead over ...
German travel group TUI has finally sold its remaining stake in Hapag-Lloyd, ending an investment in the container line that spanned almost two decades.
TUI said yesterday it had agreed the sale of its 8.5m shares for €244m ($278m), taking its share disposal in the carrier since March to around €400m.
Following the merger with UASC, which closed in May, TUI had retained an 8.9% stake in the new entity.
Hapag-Lloyd’s share price is enjoying a 52-week high of around €32.50, from a low last year of just €16, based on the expectation of a recovery for the liner industry.
Having acquired Hapag-Lloyd in 1998, tourism giant TUI purchased the multiple-brand business of CP Ships in 2005 for $2bn, which propelled the carrier to fifth-largest in the world.
However, with a radical change of strategy, TUI decided to focus on its core travel business and moved towards divesting its exposure in the oft-troubled liner industry.
In 2008, TUI was close to a sale of Hapag-Lloyd to Singapore’s Neptune Orient Lines for a reported $5bn, but at the last minute a consortium of Hamburg businessmen, titled Albert Ballinn, stepped in, securing a two-thirds stake in the carrier to keep the company in German hands. TUI retained 33% as an “entrepreneurial stake”.
CSAV became the largest shareholder in 2014 with 31.4%, after the Chilean carrier’s container business was merged into Hapag-Lloyd. It retains that position, but with a diluted 22.6% stake, following the recent merger with UASC.
Unlike Maersk, CMA CGM and now Cosco, which maintained the trading names of acquisitions, Hapag-Lloyd’s management has opted to dispense with the household names in favour of a beefed-up single brand.
In a separate development, Hapag-Lloyd said yesterday it had signed a “strategic cooperation agreement” with China’s Bank of Communications Financial Leasing that will provide up to $500m to support the carrier’s fleet expansion. And on 3 July, Hapag-Lloyd successfully launched a 5.25% ticket €300m bond offering to redeem 7.5% and 7.75% notes due for repayment in 2018 and 2019, thus reducing its interest burden.
The carrier also received a boost from rating agency Standard & Poor’s, which advised that it had taken the carrier off its “CreditWatch” listing, where it had stood since 26 April, ahead of the completion of the merger with UASC.
S&P reconfirmed Hapag-Lloyd’s pre-UASC corporate credit rating of B+ “Outlook Negative” on the expectation of a sustained improvement in freight rates, but with remaining concerns that another rate war could erupt.
In the first quarter, Hapag-Lloyd slid back into the red to the tune of $66m, hit by higher fuel prices and alliance restructuring costs. However, many higher contract rates between Asia and Europe did not kick in until the second-quarter, and that, coupled with a higher spot market, should ensure that the German carrier posts improved results for the first half when it reports in August.