HHLA accepts MSC bid

It appears that MSC’s bid to buy the German terminal company HHLA has been successful. The Supervisory and the Executive Boards of Hamburger Hafen und Logistik AG (HHLA) issued a statement on the 6th November that both had accepted the offer of Mediterranean Shipping Company S.A. (MSC) which was made on the 23rd October. The offer for Class A shares in HHLA is €16.75 per share. The City of Hamburg is the dominant shareholder in HHLA.

The acceptance of the offer by HHLA has been likely for a number of weeks. The approach by MSC in September was followed by speculation that Hapag Lloyd could be persuaded to bid for control of what might be described as Hapag Lloyd’s ‘home’ port. Hamburg investor Klaus-Michael Kuehne made a statement implying that he was unhappy with the MSC bid. It is believed that he urged the management of Hapag Lloyd to consider making a rival offer for HHLA, however the CEO, Rolf Habben Jansen, said last month that the company would not do so.

The process has been further complicated by the need to achieve agreement with the various shareholders and other interested parties within HHLA. Essentially owned and controlled by the City of Hamburg, any takeover required political as well as economic approval. This is evident from the agreement over the deal between MSC and HHLA which is characterised by a promise to grant a high degree of autonomy to HHLA as well as significant investment.

For example, according to HHLA, “the neutrality and independence of HHLA’s business model, in particular of the intermodal subsidiary Metrans, and thus the equal treatment of all customers will be ensured” which seems to be an acknowledgement of the fears of other container shipping lines that they might be at a disadvantage when dealing with a MSC owned HHLA.

The latter also has insisted on retaining “decision-making authority over its investment planning. In particular, the ongoing modernisation of HHLA’s container terminals in Hamburg” and that it will retain its “existing strategy”. MSC has also agreed not to make any employees redundant “for operational reasons for at least five years”. Finally, both sides have committed to invest €775m between 2025 and 2028, with the City of Hamburg committing to contribute €450m of this.

The purchase of HHLA is an important development in a port that has not always achieved its potential. It also strengthens MSC’s container terminal business significantly.

Author: Thomas Cullen

Source: Ti Insights

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