Hapag-Lloyd’s listing may trigger new consolidation

The German container shipping company Hapag-Lloyd has announced that intends to list itself on the Hamburg and Frankfurt stock exchanges in October. This marks the end of a process which started off with the company being a subsidiary of the TUI conglomerate, through the creation of a private ownership structure and now to being a publicly quoted company.

The offering will be of new equity in the company worth €500m, of which the key part will be a sale of €400m to external institutional investors. TUI, which continues to hold 14% of the company, has indicated that it wishes to sell-down some of its holding in Hapag-Lloyd, leaving a core group of shareholders comprised of the CSAV, the Hamburg City Government and Kuehne Maritime (which is an investment vehicle of Klaus-Michael Kuehne). At present these three comprise 78% of the equity, however they have agreed with each other that they will not allow their holding to fall below 51% and that they will act in concert, effectively controlling the management of the company. Both CSAV and Kuehne have indicated that they will each buy €50m of the new equity

Rumours around the stock market suggest that the listing will result in Hapag-Lloyd being initially valued at around €450m.

The ability to raise capital is important for Hapag-Lloyd. Rolf Habben Jansen, Hapag Lloyd’s CEO, commented that the listing would “give us better access to the capital markets which will enable us to further invest in our business to become more competitive”, this is likely to include buying some ultra-large container vessels which are necessary to keep the line cost competitive.

However at a strategic level the question of the acquisition or merger with another shipping line must be prominent. The company states that it is not considering a purchase at present, rather it is focussing on integrating the business that it purchased from CSAV last year. Yet the possibility of buying the APL Container shipping business from its Singaporean owners must remain likely. Prominent shareholder Klaus-Michael Kuehne, has been vocal in his assertion of an attractive fit between the two businesses and access to capital markets could make this move much easier.