Transport Takeover

Shipping News: Maersk to Buy Hamburg Süd

  • Why it matters

    Why it matters

    Hamburg Süd’s takeover could help to reduce overcapacity in the container shipping industry and ultimately make the sector more profitable.

  • Facts

    Facts

    • The container shipping industry has struggled the past few years as it faces an oversupply of shipping capacity, pushing global container freight rates down by roughly 25 percent since the start of 2012.
    • Hamburg Süd is Germany’s second-largest shipping group after Hapag Lloyd and fully owned by Oetker Group, a family-held conglomerate.
    • The shipping industry’s largest players are Copenhagen-listed Maersk, Swiss-based Mediterranean Shipping Company, French company CMA CGM, and Chinese shipping combination COSCO/CSCL.
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    Audio

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Family-owned Hamburg Süd will become part of the world leader, Copenhagen-listed Maersk. Source: Marcus Brandt, DPA

Danish shipping giant Maersk said Thursday it had agreed to buy German rival Hamburg Süd in a deal that will combine the world’s largest and seventh-largest shippers, in another sign of consolidation among container shippers.

Maersk said it had signed a preliminary agreement to buy Hamburg Süd from its owner, Germany’s Oetker Group, a family-owned conglomerate based in Bielefeld that also makes frozen pizzas, puddings and other processed foods.

Copenhagen-based Maersk and privately-held Oetker did not release financial details of the transaction, which still must be approved by European antitrust officials. Hamburg Süd had around $6.7 billion in sales in 2015. The company has a fleet of 189 cargo ships, about 48 of which it owns. The container shipping arm of Maersk, Maersk Line, had turnover of $23.7 billion last year.

The merger is the latest consolidation in global shipping, which has been suffering amid a downturn in global trade ever since the 2008 financial crisis.

“Global container liner shipping has been generating losses for years in the face of rising overcapacity.”

Oetker Group

Maersk’s class B shares rose 5.5 percent to 9,825 Danish krone, or $1,402, by 11:39 a.m. local time in Copenhagen, valuing Maersk at $14.1 billion.

“Maersk Line expects to communicate further details following the approval of the sales and purchase agreement expected early in the second quarter of 2017,” the Danish company said in a statement.

It expects to close the transaction, which is subject to due diligence and regulatory approval in several countries, at the end 2017.

The new deal comes amid a flurry of consolidation in the entire sector, which is suffering from overcapacity and reduced shipping rates around the globe.

Even Hamburg Süd itself was already a target: A deal to merge with Hapag-Lloyd, Germany’s largest shipper, fell through in 2013.

Hapag-Lloyd, the world’s number five shipper, is instead merging with the United Arab Shipping Company. In Asia, South Korean rival Hanjin went bankrupt in September. Recently three Japanese shippers, Nippon Yusen Kaisha, Mitsui OSK Lines and Kawasaki Kisen Kaisha (K-Lines), announced they would merge starting in April 2018.

For Oetker Group, whose roots date back to 1891, the sale will mean a halving of its annual revenue of €12.2 billion, or $13 billion. It employed 30,787 people last year, of which 5,960 were at Hamburg Süd.

The family-owned firm said it had decided to sell because it would have needed a lot of capital to actively participate in the shipping sector’s consolidation. That would make it difficult to balance Oetker’s overall business risks, the group said.

“Global container liner shipping has been generating losses for years in the face of rising overcapacity,” Oetker Group said in a statement Thursday.

 

Gilbert Kreijger is an editor with Handelsblatt Global, covering companies and markets. To contact the author: kreijger@handelsblatt.com 

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