The Hanseatic port community is in shock today as Germany’s annual big government maritime conference gets underway in Bremen with delegates still absorbing Wednesday’s news that Swiss-headquartered Mediterranean Shipping Co (MSC), the world’s largest containerline, has moved to buy a 49.9% stake in Hamburg’s largest port operator.
The city-state of Hamburg and MSC yesterday signed a binding preliminary agreement establishing a strategic partnership with Hamburger Hafen und Logistik (HHLA), the city’s top port operator, which also has overseas facilities and a significant rail arm.
MSC will make a tender offer, thought to be worth $1.4bn, looking to run HHLA as a joint venture, with the city’s share being 50.1% and MSC’s share being up to 49.9% with the Soren Toft-led line committing yesterday to make the north German port city a “central hub” for MSC’s global network of container services.
At a press conference yesterday, Toft, MSC’s CEO, outlined plans to add an annual extra 1m teu to Hamburg in the coming eight years. A new German headquarters is to be built in Hafencity, and the cruise division, MSC Cruises, is also to have a new home port here with the number of employees in the city doubling to around 700.
MSC said the partnership is intended for an indefinite period of time, although termination is only possible after 40 years.
Earlier this year China’s COSCO bought a 24.9% stake in HHLA’s Container Terminal Tollerort (CTT), a deal that was watched closely as it marked the first time an overseas company had bought into German port infrastructure. At the same time, from this spring MSC entered into secret discussions with Hamburg politicians to come in with its huge investment to revive HHLA, a company that has been ailing for many years, with much box traffic migrating west from Germany to Rotterdam and Antwerp.
Speaking at a press conference from Hamburg’s iconic city hall (pictured), Dr Peter Tschentscher, the mayor of Hamburg, hailed the deal, saying: “It reflects MSC’s strong commitment to the Port of Hamburg, corresponds to the Senate’s strategic goals in port policy and can give our entire maritime economy the boost it needs in difficult times.”
Dr Andreas Dressel, Hamburg’s finance senator, aware of the likely criticism about another foreign firm coming into the port, stressed to reporters: “The majority of HHLA remains in the hands of the city. The company remains in the Hamburg corporate family. Through joint leadership between the city and MSC, we increase the Senate’s control options at HHLA.”
In a next step, MSC will prepare the offer document for the takeover. This will be submitted to the Federal Financial Supervisory Authority (BaFin) for approval within the next four weeks, with a standard processing time of 10 working days. The offer document will be published immediately after approval, likely in the second half of October. During the following four-week offer period, followed by a mandatory two-week period, investors can decide whether to accept the offer.
The completion of the transactions is subject to official approvals and the consent of the citizens of the city of Hamburg.
One Hamburg citizen in particular will be doing all he can to keep MSC out. Klaus-Michael Kühne, who controls Kuehne + Nagel as well as holding a 30% in Hamburg’s top line, Hapag-Lloyd, has been voicing his own interest in taking control of HHLA.
“First access to a minority stake in HHLA should of course have been granted to a genuine Hamburg company like Hapag-Lloyd,” he told German newspaper FAZ yesterday.
“I can only strongly advise Hapag-Lloyd to make a takeover bid for 49.9% of HHLA shares itself and immediately,” he said, adding that if this did not occur, his own holding company would consider doing so.
Hapag-Lloyd did not comment on a potential takeover bid, saying only the deal would “not affect our cooperation with HHLA”.
Commenting on the news via LinkedIn, Theo Notteboom, a professor of port and maritime economics at the University of Antwerp, said the MSC deal would likely bring more business to Hamburg. Similar liner investments exist in rival ports, Rotterdam and Antwerp, he noted, two places that have gained significant market share from Hamburg in recent years.
“When it comes to Hamburg’s future development as a container hub, I would argue there is a strong economic rationale for the participation of carriers in the port’s container terminals,” Notteboom suggested.
The MSC news however is causing consternation some 100 km away to the west at Bremen and Bremerhaven.
“Following the acquisition of a stake in HHLA, there may be transfers of loads in German and European container transhipment. It is not yet possible to definitively assess whether this will have an impact on the loading volumes in Bremerhaven “, Bremen’s Department of Economy, Ports and Transformation said on Wednesday.
In Bremerhaven, MSC has been running MSC Gate Bremerhaven as part of a joint venture with Eurogate for the past 19 years. This 50% participation will be maintained, assured MSC boss Toft. However, in the future, the company will focus more on Hamburg. The operating contract in Bremerhaven was recently extended until 2048.
In July last year, HHLA and Eurogate ended more than two years of discussions about bundling together the container terminals of both companies in Hamburg, Bremerhaven and Wilhelmshaven.
MSC’s entry into Hamburg is expected to be a top talking point at this year’s National Maritime Conference, organised by the Federal Ministry of Economics, taking place in Bremen today and tomorrow.
