EU green lights COSCO’s takeover of OOIL

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Under the proposed transaction, COSCO will own 90.1 percent of Orient Overseas (International) Ltd. and Shanghai International Port (Group) Co., Ltd. will own the remaining 9.9 percent share.

   The European Commission has approved COSCO Shipping Holdings’ bid to take over Orient Overseas (International) Ltd. (OOIL), the parent company of Hong Kong-based ocean carrier Orient Overseas Container Line (OOCL).
   COSCO and Shanghai International Port (Group) Co., Ltd. (SIPG) made a joint offer for OOIL on July 9. Under the terms of the proposed deal, which is valued at $6.3 billion, COSCO and SIPG will pay $78.67 Hong Kong (U.S. $10.07) per share in cash for all outstanding OOIL stock. COSCO will own 90.1 percent of OOIL, while SIPG will hold the remaining 9.9 percent share.
   The deal gained approval from China’s State-owned Assets Supervision and Administration Commission in early September.
   COSCO’s shareholders approved the acquisition in October, and COSCO and OOIL also revealed in October that U.S. government regulators found no antitrust violations with the proposed deal.
   The European Commission said it examined the impact that the proposed transaction would have on markets where both OOIL and COSCO are active, primarily the deep-sea container liner shipping service market.
   If the market shares of the alliances or consortia that OOIL and COSCO belong to are taken into account, the transaction would affect the following trade routes (in both directions):
     • North Europe-North America;
     • Northern Europe-Far East;
     • The Mediterranean-Middle East;
     • And the Mediterranean-Far East trades.
   Although the commission found that the combined market share of COSCO and OOIL and their consortia partners would be very significant on the North Europe-North America trade route, it concluded that overall, the proposed transaction would not give rise to competition concerns.
   This is because of the presence of significant competitors post merger, the fact that the companies do not appear to be close competitors, and because of COSCO’s marginal position on the North Europe-North America trade route, the commission explained.
   The commission also examined the effects the proposed transaction would have on a number of different markets – particularly the market for container terminal services and freight forwarding – without finding any competition concerns.
   Currently, COSCO is the fourth largest carrier is terms of operating fleet capacity, while OOCL clocks in at seventh place, according to ocean carrier schedule and capacity database BlueWater Reporting’s Carrier Ranking tool.
   COSCO and OOCL are both members of “THE” Alliance, a vessel sharing agreement on major east-west trades that commenced operations in April. THE Alliance also includes Evergreen Line of Taiwan, CMA CGM of France, and CMA CGM’s subsidiary line APL.

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