At Hapag-Lloyd’s annual general meeting (agm) on Friday all items on the agenda were approved by shareholders. Items approved by shareholders included the creation of new authorized share capital which will be used as the basis for the merger with UASC, and an expansion of the company’s supervisory board from 12 to 16 after the merger has been completed.
UASC’s shareholders will take a 28% stake in the combined Hapag Lloyd-UASC entity, spilt on the Arab side between Qatar Holding (14.4%), Saudi Arabia’s Public Investment Fund (10.1%) and other minority shareholders (3.6%).
“The pending merger with UASC is another strategic milestone for Hapag-Lloyd. We intend to bring the skills of Hapag-Lloyd and UASC together in such a way that the company is in a stronger position to face both current and future industry challenges. Hapag-Lloyd is not only growing, it is also becoming more international and, above all, more competitive,” said Rolf Habben Jansen, ceo of Hapag-Lloydwhile addressing around 300 shareholders in attendance.
“This merger gives us the large vessels we need in order to achieve low transport costs per container. With the investments already made by UASC in these ship classes, Hapag-Lloyd will not need to make any more investments in large vessels in the next few years.”
Disclosures by Hapag-Lloyd ahead of its agm revealed the financial toll this fleet expansion has had on UASC. The line had racked up debt of $4.06bn and reported a $384m net loss in 2015. Losses continued in the first half of 2016 with a $201m net loss.
Hapag-Lloyd itself reported $158m first half loss and has issued a 2016 profit warning.
However, ceo Jansen was upbeat about what the merger would mean for Hapag-Lloyd’s business going forward. “With this merger, we are consolidating our position among the world’s five biggest container shipping companies in the long term and are considerably increasing the gap between us and the shipping companies that come after us,” he stated.
“We expect the combination of Hapag-Lloyd and UASC to reap us further significant improvements in our profitability and we firmly believe that the merger will allow us to rise to the various industry challenges even better and more strongly than ever before.”