Logistics, Finance - Cosco Bids For Orient Overseas
Cosco Shipping is offering US$6.3 billion to acquire the container carrier Hong Kong's Orient Overseas International Ltd (OOIL). If it goes through, the deal will make Cosco of mainland China the world's third-largest shipping line.
The deal would pay current shareholders about 30-percent higher than the stock's last closing price. Some analysts believe that is a little too high, given that the shipping industry is still trying to emerge from a long slump. But state-owned Cosco hasn't made a secret of its desire to get a tighter grip on shipping and logistics around the world, and the deal would place it behind only Denmark's Maersk Line and Switzerland's Mediterranean Shipping Company.
Orient Overseas was formed in 1969 by former Hong Kong Chief Executive Tung Chee-hwa's family, and the Tungs still hold about 69 percent controlling interest. Merging into Cosco wold give the new company more than 400 vessels with capacity exceeding 2.9 million twenty-foot equivalent units, including order book.
"This decision has been carefully considered and we believe it helps ensure the future success of OOIL," Andy Tung, chief executive officer of Orient Overseas, said in a statement. "We are confident that Cosco Shipping Holdings is the right partner for us."