Cosco Shipping releases additional information on OOIL takeover

The additional disclosures made by Cosco Shipping Holdings, the listed arm of Cosco Shipping, came after the Shanghai Stock Exchange (SSE) asked to be further filled in with more details.

On the issue of the deal seeking antitrust approvals, in particular from overseas authorities, Cosco Shipping said that while there remains a “certain degree of uncertainty” in passing the relevant anti-monopoly review, the group holds a “positive attitude” of the review from the US and EU based on preliminary judgments.

Cosco Shipping pointed out that merger and acquisition transactions in the container shipping industry that have passed the anti-monopoly review in the EU in recent years included Maersk’s acquisition of Hamburg Sud, Hapag-Lloyd’s acquisition of UASC, and CMA CGM’s acquisition of Neptune Orient Lines (NOL).

The SSE also took issue with Cosco Shipping mentioning its intend to maintain OOIL’s listing when there is a possibility that the public will end up holding less than 25% of shares, violating the listing requirements of the Hong Kong Stock Exchange (HKSE).

In response, Cosco Shipping reiterated that the group and the joint offeror, Shanghai Port International Group (SIPG), intend to maintain the listing status of the shares of OOIL upon completion of the offer. It added that they “intend to take the appropriate steps to restore the public float in accordance with the Hong Kong listing rules.”

Cosco Shipping explained that common measures taken to restore public float in Hong Kong include issuance of new shares to independent third-party investors, sale of its existing stocks to independent third-party investors by core connected persons of the listed company, or issuance of bonus shares or permanent convertible securities by the acquired company, and so forth.

Cosco Shipping and SIPG has offered to acquire 429,950.088 OOIL shares representing 68.7% of issue share capital, with the remaining 31.3% of shares to be validly tendered for acceptance by Cosco Shipping.

Due to the attractive premium of around 55.2% over the average closing price of HKD50.69 per share for the 30 trading days immediately prior to 6 July 2017, the Cosco Shipping offer is deemed attractive enough to entice possibly many shareholders to accept the offer and thus dilute the public ownership to less than 25%.