Hapag-Lloyd merger with United Arab Shipping Company

Overview:

• Germany's largest shipping container company, Hapag-Lloyd, and its equivalent in the Middle East, United Arab Shipping Company (USAC), have agreed to merge and form the world's fifth largest freight shipping business.
• Under the agreement, USAC majority shareholders Qatar Holding and Saudi Arabia's Public Investment Fund will hold around 14% and 10% in the combined company. 
• Hapag-Lloyd's majority shareholders, Compañía Sud Americana de Vapores (CSAV), HGV (City of Hamburg) and Kuehne Maritime, will retain the same status within the merged company. 
• The new business will be based in Hamburg and listed in Frankfurt.
• The terms of the deal require the company to launch a €400 million back-stop rights issue within six months of the merger completing. 
• Shipping has seen a flurry of mergers since the financial crisis as global businesses fight for the share of a market experiencing over-capacity and record low rates. 
• With this latest move, Hapag-Lloyd, which merged with Chilean CSAV in 2014, will gain access to more trade routes between Asia and Europe, and a younger, bigger fleet.  
• USAC will benefit from Hapag-Lloyd's trans-Atlantic routes and broader client base. 

Ben Naylor - Regiona editor