Boards approve Maersk’s €3.7bn offer for Hamburg Süd

4/30/2017

The boards of Maersk Line and Hamburg Süd have approved Maersk’s proposed €3.7 billion (US$4 billion) acquisition of Hamburg Süd, with the deal expected to close the transaction by the end of 2017.

Maersk Line announced on 1 December 2016 its intention to acquire the German container shipping line Hamburg Süd, and the sale and purchase agreement was today approved by the boards of Maersk Line and the Oetker Group.

The acquisition still remains subject to regulatory approvals, but Maersk Line said today it expects to close the transaction by the end of 2017. Until then, Hamburg Süd and Maersk Line will continue business as usual as separate and independent companies.

Under the agreement, Maersk Line will acquire Hamburg Süd for €3.7 billion on a cash and debt-free basis. Maersk Line will finance the acquisition through a syndicated loan facility.

“Today, we have taken a decisive step towards the shared future of Maersk Line and Hamburg Süd,” said Søren Skou, CEO of Maersk Line and A.P. Moller-Maersk. “Our due diligence confirmed that Hamburg Süd is a well-run company with strong and highly respected brands.

“We have confirmed the anticipated synergies and we are convinced that our plan to maximize customer retention is the right path forward. I have no doubt that together we can develop new competitive products to the benefit of our customers and exploit operational synergies. The acquisition is cementing our position as the largest and leading carrier in container shipping, and it will provide great opportunities for the employees of both companies.

He said the acquisition was in line with the Maersk Line's growth strategy and “represents a unique opportunity to combine two complementary businesses and realise sizable operational synergies as well as commercial opportunities”. Combined, the two companies will be able to realise operational synergies in the region of US$ 350-400 million annually over the first couple of years following completion of the transaction, Maersk claimed. 

Maersk confirmed that Hamburg Süd will maintain its own structure under its separate brands following the purchase. The cost synergies would primarily be derived from integrating and optimizing the networks as well as standardized procurement. In addition, APM Terminals' global portfolio will benefit from increased volumes, specifically the many investments made in the Latin America Region, Maersk said.

It said the combined network would include increased number of weekly sailings, faster transit times, more port calls, more direct port-to-port calls and less need for transhipment, to the benefits of both Maersk Line and Hamburg Süd customers.

“We consider the purchase price of €3.7 billion a fair valuation of Hamburg Süd. By keeping Hamburg Süd as a separate and well-run company, we will limit the transaction and integration risks and costs while still extracting the operational synergies,” Skou added. “The acquisition of Hamburg Süd will therefore create substantial value to Maersk Line already in 2019.”

To continue and strengthen the future growth of Hamburg Süd, Maersk Line emphasized its plans “to preserve the customer value proposition of Hamburg Süd. It also commits to maintain the presence of Hamburg Süd in Hamburg, Germany, and has agreed to lease the local head office, initially for a period of five years”.

Skou added: “Hamburg Süd has a strong brand and an attractive customer value proposition. We believe these elements are key for our acquisition to become a success. Therefore, Hamburg Süd will remain under own management and with full brand responsibility.”

Ottmar Gast, chairman of the Hamburg Süd executive board, said: “We see the acquisition of Hamburg Süd by Maersk Line as a natural development and we are convinced that Hamburg Süd will thrive under continued own management and maintain not only the services offered to its customers, but also provide its employees a fantastic opportunity to continue shaping the future of the industry as a leading service provider. With the acquisition, Maersk Line and Hamburg Süd will have a total container capacity of around 3.9 million TEU (3.3 million TEU) and an 18.7% (16.0%) global capacity share (Alphaliner per 24 April 2017). The combined fleet will consist of 743 container vessels.”

Maersk said the process of obtaining regulatory approvals was on schedule. On 23 March 2017, the US Department of Justice approved the proposed acquisition and on 10 April 2017, the EU Commission approved the proposed acquisition, subject to conditions.