Hapag-Lloyd and CP Ships to merge

Aug 22, 2005
Author: P&S

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German tourism and shipping group TUI, the parent body of Hapag-Lloyd is set to become the new owner of CP Ships, following the acceptance by the CP Ships Limited board of directors of a US$ 2Bn cash offer (Euro 1.7Bn).

The deal remains conditional on two thirds of CP shareholders agreeing to the sale.

The merger involving Hapag-Lloyd and CP Ships will result in a fleet of 139 vessels with a further 17 on order and a capacity of 400,000TEUs, operating globally over 100 routes and making this the fifth largest container line.

Ten days ago CP Ships announced a record first two quarters with profits of USm and USm respectively for the first two quarters of 2005, double that of the first half for 2004.

Although registered in Canada CP Ships is headquartered in the UK and employs a total of 4,800 people worldwide. The company, which hived off from Canadian Pacific in 2001, came onto the market for merger or outright sale in recent weeks.

The shipping company has been represented in South Africa by the former Lykes Lines, which has operated between North America and South Africa for over 50 years. Lykes Lines recently assumed the mantle of CP Ships in line with other subsidiary companies. Among other brands are ANZDL, Canada Maritime, Cast, Contship Containerlines, Italia Line, and TMM Lines

TUI says it has sufficient bank credit to finance the purchase but will raise another one billion euro in equity to reduce its debt ratio.

The announcement follows a number of other recent consolidations including those of Royal P&O Nedlloyd which is to be absorbed into the AP Moller-Maersk company as the Maersk Line, and the takeover of Delmas Line by fellow French company CMA CGM.

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