Cosco’s takeover of OOCL faces American hurdle

Cosco’s takeover of OOCL faces American hurdle

Investors in Hong Kong’s Orient Overseas (International) Limited (OOIL), the parent of containerline OOCL, are beginning to get jittery that US regulators could pull the plug on its takeover by China’s Cosco Shipping.

OOIL’s share price closed at HK$69.25 yesterday, its lowest closing price since July 7 last year when Cosco, together with joint-acquirer Shanghai port operator, SIPG, announced its general cash offer to acquire OOIL for HK$78.67 per share.

“The shares are now trading at a 12% discount to COSCO’s offer price, with investors increasingly concerned that the deal could be blocked by US regulators,” analysts at Alphaliner wrote in their most recent weekly report.

Alphaliner said there was anxiety over worsening Sino-US trade ties and the Trump administration’s efforts to curtail Chinese investments in the US, with the analysts listing a series of big Chinese deals blocked by the Committee on Foreign Investment in the United States (CFIUS) in the past 12 months.

Although the COSCO-OOIL deal has already passed the US’ Hart-Scott-Rodino anti-trust review, it still awaits approval from CFIUS.

American concern has been raised over OOCL’s Long Beach Container Terminal (LBCT), which would become Cosco’s third Californian terminal under its control if the deal went through.

Under the terms of the $6.3bn deal the Tung family controlled OOIL signed with state-backed Cosco, the takeover must be completed by the end of June this year. Cosco and OOCL combined would catapult the Chinese carrier into third place in the global liner rankings, just ahead of France’s CMA CGM.

Cosco’s vice chairman Huang Xiaowen told reporters at a press conference in Shanghai earlier this month that the deal is still awaiting approvals from the US and on home soil in China, but remains very much on track for a June conclusion.

A Cosco spokesperson told Splash today: “The acquisition is well on track and we will release updates at the proper time.”

Splash is still waiting replies from officials at OOCL. OOIL’s share price was up by HK$0.25 to close today at $69.50.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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