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Cosco Shipping in talks to acquire OOCL

Cosco Shipping in talks to acquire OOCL
China Cosco Shipping Corporation Limited (Cosco Shipping) is reportedly a contender to buy Hong Kong-based Orient Overseas Container Line (OOCL) in a deal valued at more than $4bn, Wall Street Journal reported.

The market has been rifted with speculations that OOCL, the container arm of Orient Overseas International Limited (OOIL) could be up for sale amid the ongoing consolidation of the global container shipping sector.

The media report wrote that state-owned Cosco Shipping is in the process of preparing a bid valued at more than $4bn to acquire its competitor OOCL. Cosco Shipping Lines, the container arm of Cosco Shipping, and OOCL are members of the Ocean Alliance that is scheduled to start operations in April this year.

Analyst Drewry mentioned earlier that OOCL would be a good buy given its established reputation and track record of profitability even in tough markets.

At present, Cosco Shipping Lines is the world’s fourth biggest carrier with a carrying capacity of some 1.58m teu and accounting for around 7.5% of global market share, behind Maersk Line, Mediterranean Shipping Company (MSC) and CMA CGM. OOCL is the world’s eighth biggest line with a carrying capacity of 575,000 teu accounting for 2.8% of market share.

There have been unconfirmed speculations that France’s CMA CGM is also potential buyer of OOCL, but Wall Street Journal cited sources saying that Cosco Shipping has made more progress on acquisition deal.

“It is not a surprise if the Chinese government steps in to orchestrate a marriage between a mainland shipping giant and a Hong Kong counterpart,” Xiong Hao, assistant general manager of Shanghai Jump International Shipping, told South China Morning Post.

The consolidation of the container shipping sector has seen CMA CGM buying out Neptune Orient Lines (NOL) which owns APL, Maersk Line acquiring Hamburg Sud, and the merger of Hapag-Lloyd and United Arab Shipping Co (UASC).