The $6.3bn Cosco Shipping has bid to take over Orient Overseas Container Line (OOCL) and the assets of its parent are not over the top, a senior Cosco official argued on Thursday.
Cosco vice chairman Huang Xiaowen, speaking at an earnings briefing, said the acquisition of Hong Kong–listed OOCL – potentially the most expensive container shipping acquisition in history – was not overpriced, providing state-run Cosco with huge new operational efficiency and brilliant brand value. Unlike previous acquisitions Cosco will keep the OOCL brand separate.
By taking on the 678,000 slot-strong fleet of OOCL, China’s Cosco will challenge Marseille-based CMA CGM for third spot in the global liner rankings.
“The synergy effect will not be shown in one year, but in the next few years and up to 10 or 20 years,” Huang maintained.
Cosco hopes regulators across the world will see fit to get the merger completed by the end of this year.
The Cosco-OOCL deal has been many years in the making with the Tung family, the majority owners of the Hong Kong-listed liner, having previously rebuffed bids from state-run Cosco. As speculation grew throughout this year that a deal would finally be consummated the share price in OOCL’s parent more than doubled.
Bloomberg data suggests the Tung family, which controls just under 70% of listed OOIL, will pocket about $1bn from the sale.
Former Hong Kong chief executive Tung Chee-hwa’s personal net worth will increase by about $400m to $2.9bn, according to the Bloomberg Billionaires Index, while his younger brother Tung Chee Chen will take home about $600m from the sale, boosting his net worth to about $3.8bn when the deal is completed.