Cosco acquisition of OOIL still faces regulatory hurdles just two weeks from deadline

With just two weeks to go for the deadline for Cosco to acquire Orient Overseas International Ltd (OOIL) regulatory hurdles still need to be cleared.

In its latest weekly newsletter Alphaliner highlighted that the $6.27bn has to be completed by 30 June this year and still needs to be cleared by China's Ministry of Commerce (MOFCOM), and the requirements of the US Committee on Foreign Investment in the United States (CFIUS).

Failure for the deal to be approved by the Chinese authorities would seem unlikely, failure to gain CFIUS approval could also affect the closing of the deal.

“Obtaining CFIUS approval appears to be the trickier of the two hurdles, and CO- SCO has not provided any official clarification on the status of its negotiations with the committee so far,” Alphaliner said.

“While Cosco reportedly proposed to divest or carve out the OOCL-owned Long Beach Container Terminal (LBCT) to help ease US national security concerns, no details of any such plan have been made public until today.”

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If either of the two conditions is not met by 30 June Cosco could walk away from the deal without penalty. However, even if CFIUS approval is not given by the deadline it does not mean the acquisition is dead in the water.

“Any delay in securing the approvals may not necessarily doom the deal, as both COSCO and OOIL could mutually agree to extend the deadline beyond the proposed ‘Long Stop Date’ of 30 June 2018,” Alphaliner said.

Posted 14 June 2018

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Marcus Hand

Editor, Seatrade Maritime News

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