Cosco to buy OOCL for $6.3B and keep brand

Cosco Shipping Holdings plans to buy Orient Overseas Container Line (OOCL) with the help of Shanghai International Port Group (SIPG) for $6.3 billion. The combined Cosco Shipping and OOIL would have a fleet of more than 400 ships, totaling a capacity of 2.9 million TEU including orderbook. Together, Cosco and OOCL would operate the third-largest mega-ship fleet and be the second-largest mover of US containerized goods.

Under the deal, OOIL would keep its Hong Kong corporate headquarters and the independent share listing. It would also put off any headcount reductions at OOIL for at least 24 months. Both companies are members of the Ocean Alliance, and will continue to work together under this framework.

OOCL reported a $273 million loss in 2016 as weak freight rates dragged down the average revenue per TEU by almost 19 percent to just $774 per container. Cosco on April 28 reported volume rose 7 percent-year-over-year, while revenue increased 6.4 percent, to $1.18 billion. Overall revenue per TEU, however, slipped 0.6 percent from first-quarter 2016.

(JOC)