Containership operator CP Ships Ltd., which has been involved in several takeover rumors of late, is being acquired by German travel and shipping company TUI AG in a deal valued around $2.3 billion.
The CP Ships Limited board of directors has unanimously recommended that shareholders accept an offer from TUI AG to acquire CP Ships in an all-cash transaction for US $21.50 per share or about $2.0 billion on a fully diluted basis. Including the assumption of net debt of $0.3 billion at 30th June 2005, the transaction has a total value of $2.3 billion.
The offer price represents a premium of about 28% over CP Ships average closing share price over the past three months. TUI is the parent of the Hapag-Lloyd container shipping business and plans to combine the two to create the world’s fifth-largest container shipping company with a fleet of 139 ships (and a further 17 on order) for a capacity of approximately 400,000 teu on over 100 routes spanning the globe.
The purchase is a strong response to the A.P. Moeller-Maersk purchase of Dutch rival P&O Nedlloyd announced earlier this year.
Before the effects of consolidation, the combined shipping business would have had sales of approximately $7.0 billion and EBITDA of $731 million in 2004.
“Having improved the performance of the business after a difficult 2004, the Board undertook a review of our business and its potential opportunities. This transaction represents immediate and attractive value for our shareholders and the Board has recommended it unanimously,” commented CP Ships CEO Ray Miles.
The question buyers of marine services will be asking is what impact the move could have on future capacity and their ability to bargain for acceptable rates. The containership industry has been going through a considerable amount of consolidation in recent years.
“The combination of Hapag-Lloyd and CP Ships will create a company with the strength and scale to compete effectively in an industry where consolidation is changing the landscape. Furthermore, the combined company will offer enhanced resources and opportunities for both CP Ships and Hapag-Lloyd’s customers and employees,” said Michael Behrendt, Hapag-Lloyd CEO.
CP Ships provides international container transportation services in four key regional markets: TransAtlantic, Australasia, Latin America and Asia. Within these markets CP Ships operates 38 services in 22 trade lanes. CP Ships’ vessel fleet stands at 82 ships and its container fleet has capacity for 441,000 teu. Volume in 2004 was 2.3 million teu. CP Ships also owns Montreal Gateway Terminals, which operates one of the largest marine container terminal facilities in Canada.
TUI’s Hapag-Lloyd container shipping operation includes 57 container ships primarily supplying the main routes between Europe and Asia, Europe and North America and North America and Asia. Hapag-Lloyd’s container shipping operation transported 2.4 million TEU world-wide in 2004.