Merger of Chinese Shipping and Cosco receives state approval
In a bid to strengthen China’s competitiveness, two of its state shipping giants will combine their container-shipping assets, as part of a multibillion-dollar merger.
China’s Cabinet approved the merger between China Ocean Shipping (Group) Co. (also known as COSCO Group) and China Shipping (Group) Co. according to statement posted on the website of China’s state-owned Assets Supervision and Administration Commission.
Cosco and China Shipping will combine their listed container-shipping operations to create the world’s fourth-biggest container-shipping line, after AP Moller Maersk Group, Mediterranean Shipping Co. and France’s CMA CGM SA.
Cosco said that in an exchange filling that it plans to consolidate the container-shipping operations with its state-backed rival China Shipping Container Lines Co. through acquiring 33 container-shipping units and affiliates from for 1.14 billion yuan and leasing its container ships.
The Hong Kong and Shanghai-listed flagship of Cosco Group plans to sell all its dry-bulk shipping businesses to its state parent for 6.77 billion yuan. China Shipping Development Co., the oil-and-bulk-shipping unit of China Shipping Group, also plans to buy the oil shipping business from China Cosco Group.
The asset restructuring also covers the two groups’ ports and oil-tanker-shipping operations. COSCOPacific Ltd., the Hong Kong-listed port-operating arm of Cosco Group will pay 7.63 billion yuan to buy the port-operating business of China Shipping (Group) Co. Cosco Pacific also plans to sell its container leasing business—Florens Container Holdings Ltd.—to a unit of China Shipping Container Lines Co. for 7.78 billion yuan.
In short, this merger will stop the two groups from competing against each other at home and abroad, at a time when the shipping industry is troubled by both oversupply and depressed freight rates.
SOURCE: [Wall Street Journal]