Maersk Line to Pay $4 Billion for Hamburg Süd

The world's biggest container shipping company Maersk Line will pay $4.02 billion (3.7 billion euros) for its acquisition of smaller German rival Hamburg Süd, it said on Friday.

Combined, the two companies will be able to realize annual operational savings of about $350 million to $400 million, Maersk Line said in a statement fleshing out details on the deal announced in December.

“By keeping Hamburg Süd as a separate and well-run company, we will limit the transaction and integration risks and costs while still extracting the operational synergies,” said Soren Skou, CEO of both Maersk Line and its parent A.P. Moller-Maersk Group.

The boards of Maersk Line and the Oetker Group, owner of Hamburg Süd, on Friday approved the proposed deal, which has been given the green light by the European Commission and the U.S. Department of Justice.

“Maersk paid a significant amount for Hamburg Süd, but considering the wave of consolidation in the industry ... you do not get anything cheaply,” Sydbank analyst Morten Imsgard said, adding that the final price was just within his highest estimate.

The proposed acquisition will still need approval from regulatory authorities in countries such as Brazil, China and South Korea, a Maersk spokesman told Reuters, adding that the company expects to secure these by December or early 2018.

“Integration does not start until we have all approvals,” he said.

The proposed merger will strengthen the Danish company's presence in global trade, particularly in Latin America, where Hamburg Süd has been long established.

“The job is now to realize those synergy effects, and integrating shipping companies is not without obstacles,” Imsgaard said, referring to past acquisitions that have resulted in a loss of market share in some areas.

Maersk is also in the process of spinning off its energy division, either by seeking alliances or a listing, to focus more sharply on its transport division.

Maersk Line expects the Hamburg Süd transaction to close by the end of the year.

Maersk also announced the appointment of Navneet Kapoor as the head of its global business, according to The Economic Times India.

Kapoor was the former chairman of board of the technology unit that supports US retailer Target Corporation Target India, he will be based at the Maersk global headquarters in Copenhagen according to the article.

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