In a lengthy release today from Hong Kong Cosco and China Shipping added further details to their mega merger plans.
The merged entity will have four professional clusters: container shipping, ports and harbors, oil and gas shipping and shipping and financial services, while dry bulk will be held separately by Cosco Group.
China Cosco Holdings, the Hong Kong-listed flagship of the Cosco empire, will become a container shipping specialist. This will be achieved by taking over China Shipping Container Lines’ (CSCL) fleet; acquiring shares of 33 agency companies from CSCL for RMB1.14bn and selling its dry bulk exposure to parent Cosco Group for RMB6.77bn. The move throws CSCL’s participation in the Ocean3 alliance with CMA CGM and UASC into doubt.
Meanwhile, Cosco Pacific will sever its container leasing businesses to focus solely on global terminal development. It will acquire China Shipping Ports Development for RMB7.63bn, and offload its Florens container leasing business to CSCL for RMB7.78bn.
CSCL, meanwhile, would appear to be in need of a name change with the entity set to become a “comprehensive listed platform specialized in shipping and financial services”, according to today’s release.
In tankers, China Shipping Development will take over Cosco Dalian, Cosco’s tanker arm, while shifting China Shipping Bulk Carrier to Cosco Group, further cementing Cosco’s position as the world’s largest operator of dry bulk carriers. The release claims China Shipping Development will become the world’s largest tanker operator, and second largest VLCC operator, on completion of the merger.
“Owing to the deep adjustment and slow recovery of the global economy in recent years, the international shipping market is experiencing an overall downturn under the increasingly fierce competition environment,” the pair said in the release. “Facing huge operating pressure, shipping enterprises around the world strive to make innovations and changes in terms of forming alliance, mergers and acquisitions, asset restructuring, cooperation between the industrial and financial sectors and the application of new technologies, etc. in order to strengthen the enterprises’ capabilities of risk resistance and sustainable development. There is a trend in the international shipping and shipping-related industries featured by professional and alliance development, thus, the market concentration rate increases further.”