Shareholders at Hapag-Lloyd, the struggling Hamburg-based shipper and logistics company, voted overwhelmingly to raise money through a capital increase, clearing the path for a merger with a rival, the United Arab Shipping Company.
The two companies signed an agreement to merge in July, creating the world’s fifth-largest shipping company.
Under the terms of the deal, some of the controlling shareholders committed to a $400 million rights issue within six months of closing the transaction.
The new shares will go to the owners of the United Arab Shipping Company, including the State Fund of Saudi Arabia and Qatar. The two companies will fuse operations on March 31.
Hapag-Lloyd chief Rolf Habben Jansen said the merger will make both companies significantly more competitive and said he expects annual synergies of $435 million from 2019.
After the merger, the United Arab Shipping Company will hold a 28-percent stake. The city of Hamburg will remain the biggest shareholder with 52 percent. German logistics billionaire Klaus-Michael Kuehne, who owns Chilean shipper CSAV, will remain a big shareholder.
With a fleet of 237 ships and transport capacity of around 1.6 million standard containers, the new group can take on its big rival, the Chinese shipping company Cosco.
Hapag-Lloyd Chief Executive Rolf Habben Jansen said the merger will make both companies much more competitive. He said he expects cost savings each year of $435 million from 2019.
But some shareholder groups are not convinced.
Karlfried von Websky of shareholder group SdK said the United Arab Shipping Company has the worst margins of all container lines worldwide. It posted a net loss of $384 million last year, and a net loss of $201 million in the first half of this year.
The takeover meanwhile will put Hapag-Lloyd further in the red. Moody’s expects the company’s debts to be seven times operating profit after the merger.
The board has promised to halve this ratio by 2018, a goal Mr. von Websky describes as “ambitious.”
The newly-merged company will also have to deal with the wider issues of global overcapacity and dwindling freight revenues.
Christoph Schlautmann covers the logistics and waste management sectors for Handelsblatt. To contact the author: email@example.com