European Union antitrust regulators are expected to rule Wednesday on the planned merger of Hapag-Lloyd and United Arab Shipping Co. that will create the world’s fifth-largest ocean container carrier.
The European Commission, the EU’s executive agency, is tipped to give the go-ahead to the deal after the UASC reportedly agreed to drop some vessel-sharing agreements with the German carrier to address regulators’ competition concerns.
The Commission was set to approve or reject the merger on Nov. 9, but pushed back the deadline to Nov. 23 to obtain feedback from third parties, including rival container lines and shippers.
If it is not satisfied with the concessions, the Commission will launch a second stage review for an additional 90 working days.
UASC, in which the government of Qatar has a 51.2 percent controlling stake, will own 28 percent of the merged carrier.
Hapag-Lloyd posted an operating profit of 25.9 million euros [$27.5 million] in the first nine months of 2016, down from 348.6 million euros a year earlier, while UASC lost $132.2 million in the first half of the year.
The merged carrier will have a capacity of about 1.6 million twenty-foot-equivalent units and a global market share of 7 percent, the same as that of Japan’s Big Three carriers, NOL, NYK, and "K" Line, when they merge their container operations in 2017.
Contact Bruce Barnard at brucebarnard47@hotmail.com.
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European Commission Gives Conditional Backing to Hapag-Lloyd, UASC Merger
The European Commission on Wednesday said it has given its conditional approval to a merger between German container shipping line Hapag-Lloyd and the United Arab Shipping Company (UASC).
The merger would create a combined company worth about 7 to 8 billion euros ($7.5-$8.6 billion). It would be the world's fifth largest shipping firm, with access to the Asia-to-Europe trade route and trans-Atlantic and trans-Pacific routes.
"Both companies operate in the container liner shipping sector," the Commission said. "The clearance is conditional on the withdrawal of UASC from a consortium on the trade routes between Northern Europe and North America, where the merged entity would have faced insufficient competitive constraint."
(Writing by Gabriela Baczynska)
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