Speculation builds of OOCL sale to Cosco

6/22/2017

The share price of Orient Overseas (International) Ltd, parent of shipping line Orient Overseas Container Line (OOCL), has risen more than 9% in the last two days to a one-year high as speculation mounts that China’s state-owned shipping group Cosco is poised to take over the Hong Kong-based line.

Shares surged 7.4% on Tuesday and gained a further 1.7% today. After rising at one point today to HK$56.15, they closed at HK$52.55 – almost double their level a year ago – giving the group a market capitalisation of around US$4.3 billion.

One report speculates that the takeover will be unveiled on 1 July to coincide with Xi Jinping’s first visit to Hong Kong as Chinese president.

However, a spokesman for OOIL has been reported today saying that “the company and OOCL is not aware of, nor is it involved in any bid relating to the company or OOCL”.

Although there has been speculation for some time about a potential takeover, this was revived in May when Cosco Shipping Holdings, the containership and port arm of China Cosco Shipping Group, announced a trading halt for its shares listed on the Shanghai Stock Exchange.

With consolidation continuing apace among global container lines, some analysts say mid-sized carriers such as OOCL have limited chance of competing with the biggest carriers. If Cosco Shipping does take over OOCL, analysis suggests that the current combined fleet capacity would reach around 2.4m teu, leapfrogging CMA CGM to become the world’s third-largest carrier. And with the orderbook included, the combined fleet capacity would