The merger between Hapag-Lloyd and United Arab Shipping Company (UASC) has been completed. With 230 vessels and a shared fleet capacity of approximately 1.6m TEU, Hapag-Lloyd is now the fifth-largest shipping liner in the world. It will remain a publicly traded company, registered in Germany with its headquarters in Hamburg, though as a result of the acquisition, Hapag-Lloyd will establish a new regional headquarters for the Region Middle East.
At the centre of the integration is the combination of 118 Hapag-Lloyd services with the 45 services making up UASC’s network. This process will start in roughly eight weeks and will take until the end of the third quarter, once the new employees from UASC have been trained to use the Hapag-Lloyd systems. After that UASC’s present transport volume will be handled on Hapag-Lloyd’s IT platform. The combined entity will thereby carry an estimated annual transport volume in excess of 10m TEU.
UASC’s 58 vessels will be integrated into the fleet of Hapag-Lloyd. The combined fleet will then include a total of 230 vessels and be one of the youngest in the industry, with an average ship age of 7.2 years. The average size of the vessels in Hapag-Lloyd’s new fleet will be some 6,840 TEU/vessel, approximately 30% larger than the average of the top 15 in the industry (5,280 TEU/vessel).
Hapag-Lloyd plans to achieve annual synergies of US$435m as a result of the merger. A significant portion of these savings should be realised during 2018, while the full amount is expected to first be reached in 2019. In addition to the synergies, the company anticipates that it will not be necessary to make sizeable investments in new builds over the next few years.
The two majority shareholders of UASC, Qatar Investment Authority, through its subsidiary Qatar Holding LLC, and the Public Investment Fund of the Kingdom of Saudi Arabia (PIF), will become new key shareholders of Hapag-Lloyd. The other UASC shareholders are the Kuwait Investment Authority on behalf of the state of Kuwait, the Iraqi Fund for External Development (IFED), the United Arab Emirates and Bahrain, which will be reflected with a combined 3.6% of the shares of Hapag-Lloyd as free float shares. The ownership structure of Hapag-Lloyd AG before the forthcoming cash capital increase, 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 roughly 14.6%.
Within six months after the closing, a cash capital increase by way of a rights issue is planned for Hapag-Lloyd AG in order to strengthen the company. This will be secured via a backstop commitment in the amount of $400m that some of the controlling shareholders have agreed to. At the Annual General Meeting of Hapag-Lloyd, to be held on May 29 in Hamburg, shareholders will be asked to approve a corresponding appropriate authorised capital.
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