Hapag-Lloyd AG and Compañía Sud Americana de Vapores (CSAV) signed a binding contract on merging CSAV’s entire container business with Hapag-Lloyd, subject to the necessary approvals. Following the integration, the new Hapag-Lloyd will rank among the four largest liner shipping companies in the world, with some 200 vessels with total transport capacity of around one million TEUs, an annual transport volume of 7.5 million TEUs and a combined turnover of 9 billion Euros. The company’s head office will remain in Hamburg. In addition, Hapag-Lloyd will have a strong regional office in Chile for its Latin America business.

CSAV will become a new Hapag-Lloyd core shareholder besides HGV (City of Hamburg) and Kühne Maritime. CSAV will initially hold a 30 per cent stake in the combined entity, alongside the City of Hamburg which will have its stake reduced from 36.9 per cent currently to 25.8 per cent; Kuehne Maritime – the vehicle through which Kuehne + Nagel chairman Klaus-Michael Kuehne owns a 28.2 per cent stake – will have its holding reduced to 19.7 per cent; travel group TUI will see its shareholding reduced to 15.4 per cent from 22 per cent, as part of its strategy to exit the company altogether, while the combined stake owned by minority shareholders will go from the current 12.9 per cent consolidated shareholding to 9 per cent.

The partners have agreed on a capital increase of 370 million euros once the transaction has been concluded, to which CSAV will contribute 259 million euros. This will then increase CSAV’s share of Hapag-Lloyd to 34 per cent. A second capital increase of 370 million euros will be linked to Hapag-Lloyd’s planned stock exchange listing.

“I am delighted that we have succeeded in concluding this partnership through which our two companies are playing an active part in consolidating the liner shipping industry. This day is an important milestone in the history of Hapag-Lloyd,” said Michael Behrendt, Chairman of the Executive Board of Hapag-Lloyd, upon signing the agreement on April 16. “The transaction increases the value of the Company and therefore also the value of our shareholders’ shares.”

“By joining forces, we are creating a stronger, larger and more global company with significant economies of scale and a considerably improved competitive position,” said Oscar Hasbún, CEO of CSAV. The combination of CSAV’s container shipping business with Hapag-Lloyd will result in annual synergies of at least US$300 million. Service networks and fleets of both companies complement one another ideally. “The combination with CSAV, Latin America’s leading container shipping line, considerably strengthens Hapag-Lloyd in this growth market and adds a strong position in the North-South traffic to the company’s global network and to its established strength in East-West traffics”, said Oscar Hasbún.

Order books are also complementary: while, at the end of April, Hapag-Lloyd will put into service the last of ten 13,200-TEU vessels ordered for the Far East trade, CSAV has seven 9,300-TEU vessels scheduled for delivery in 2014 and 2015. These container ships are specially designed for the South American trade. “This means that we will have a young and cost-efficient fleet. The use of optimum tonnage in the trades is one of the key prerequisites for successful operations in the face of international competition,” said Oscar Hasbún.

Both companies also fit in other regards: CSAV, founded in 1872, and Hapag-Lloyd, founded in 1847, share a similar blend of long tradition and entrepreneurial vision for the future. “By integrating CSAV’s container business, Hapag-Lloyd is able to build on its strengths and is therefore in an excellent position for future growth,” said Michael Behrendt, adding: “This combination will further strengthen our service portfolio and enable us to deliver an even better global service to our clients.”

The relevant corporate bodies of both companies have already approved the merger. The closing of the transaction is subject to the approval of competition authorities, and 95 per cent of CSAV shareholders.