FRANKFURT (Reuters) - Hapag-Lloyd (HLAG.DE) and Arab sector peer UASC are focused on speedy integration, Hapag’s chief executive said after the German company announced completion of their delayed merger to creates the world’s fifth-biggest shipping company.
Reuters reported last week that closure of the deal, which is valued at between 7 billion euros and 8 billion euros ($7.8 bln to $9 billion), was imminent after funding snags had been overcome.
“We now not only have a very strong market position in Latin America and the Atlantic, but also in the Middle East, where we will become one of the leading carriers,” CEO Rolf Habben Jansen said on Wednesday.
“Our priority now is a smooth and fast integration.”
Hapag-Lloyd said that the deal -- announced in April 2016 and sealed in July last year as part of efforts to weather the shipping industry’s prolonged downturn -- had closed and been listed in commercial registers, including a capital increase of 45.9 million euros.
The two businesses will start to integrate their services in about eight weeks in a process called commercial cut-over, which is due to be concluded by the end of the third quarter.
Further steps entail the inclusion of UASC’s transport volumes on Hapag-Lloyd’s IT platform and the setting up of a new regional headquarters for the Middle East region.
The two companies have a combined 230 vessels with fleet capacity of about 1.6 million twenty feet equivalent units (TEU).
Qatar Investment Authority, through Qatar Holding, now holds 14.4 percent of Hapag-Lloyd, Saudi Arabia’s Public Investment Fund has 10.1 percent and four other Gulf States investors hold a combined 3.6 percent.
Chile’s CSAV (VAP.SN) owns 22.6 percent of the new entity, the city of Hamburg 14.9 percent, investor Klaus-Michael Kuehne 14.6 percent and tourism group TUI (TUIT.L) 8.9 percent, while 14.7 percent is in free float.
A shareholders’ meeting on May 29 will be asked to approve a $400 million rights issue within six months of closing.
Hapag-Lloyd reported a deeper net loss in the first quarter, citing sustained higher fuel costs and lower freight rate income, for which it forecast a recovery in the coming quarters.
Shares in Hapag-Lloyd were up nearly 6 percent by 1352 GMT, extending gains of 2.6 percent before the announcement.
Reporting by Vera Eckert; Editing by David Goodman