Hapag-Lloyd and UASC complete merger

The so-called Business Combination Agreement (BCA) had already been signed in Hamburg in July 2016. Around a dozen competition authorities worldwide then had to give their approval under antitrust law. In addition, changes were made to company law and the approval of numerous banks was obtained.

The focus of the integration is on merging the 118 Hapag-Lloyd services with UASC's network of 45 services. This process (commercial cut-over) will start in about eight weeks, once the new UASC employees have been trained for the Hapag-Lloyd systems, and is to be completed by the end of the third quarter. Subsequently, UASC's current transport volume will be handled on Hapag-Lloyd's IT platform. The larger Hapag-Lloyd is thus expected to handle an annual transport volume of more than ten million TEU.

In addition, UASC's 58 ships will be integrated into Hapag-Lloyd's fleet. With an average age of just 7.2 years, the fleet, which will then total 230 ships, will be the youngest in the industry. At around 6,840 TEU/ship, the average ship size of the new Hapag-Lloyd fleet is around 30 percent above the average of the top 15 in the industry (5,280 TEU/ship).

The merger is expected to generate annual synergies of USD 435 million. A good portion of these savings should already be realized in 2018, while the full amount should be achieved for the first time in 2019. We also expect that no significant investments in new buildings will be necessary in the coming years. Hapag-Lloyd will establish a new regional headquarters for the Middle East region. This will add a fifth region to the existing regions of North America, Latin America, Asia and Europe.

"Hapag-Lloyd has many years of extensive expertise in acquisitions. With the merger with the Canadian CP Ships in 2005 and most recently with the merger with CSAV in 2014, we have proven that we are able to implement acquisitions and the subsequent integrations quickly, efficiently and profitably. We are optimistic that we will be able to complete the integration of UASC by the end of the current year," says Rolf Habben Jansen.

The two main UASC shareholders Qatar Investment Authority, represented by its subsidiary Qatar Holding LLC, and the Public Investment Fund of the Kingdom of Saudi Arabia (PIF) will become new core shareholders of Hapag-Lloyd. The other shareholders of UASC, Kuwait Investment Authority on behalf of the State of Kuwait, the Iraqi Fund for External Development (IFED) as well as the United Arab Emirates and Bahrain will in future be reflected in the free float with a total of 3.6% of the shares in Hapag-Lloyd. The shareholder structure of Hapag-Lloyd AG prior to the upcoming cash capital increase, which is planned after the merger, is as follows (figures rounded): CSAV (22.6%), HGV (14.8%), Kühne Maritime (14.6%), Qatar Holding (14.4%), PIF (10.1%) and TUI (8.9%). The free float will amount to around 14.6%.

Within six months of the closing, Hapag-Lloyd AG plans to carry out a rights issue to strengthen the company. This is secured by a backstop commitment of USD 400 million assumed by some of the core shareholders. At Hapag-Lloyd's Annual General Meeting on 29 May in Hamburg, the shareholders will vote on a corresponding authorized capital.