Cosco and China Shipping unveil details of merger

Hong Kong-listed China Cosco will become the world’s fourth largest container line taking over operation all the container shipping fleet of China Shipping Container Line (CSCL).

The merged container line will be the fourth largest in the world with a market share of 7.7% according to figures from Alphaliner. It is the second major consolidation in the troubled container shipping sector to be announced this week following the confirmation on Monday that CMA CGM would buy Neptune Orient Lines (NOL) for $2.4bn.

CSCL will in the meantime become a company focused on leasing containerships and containers, and financing.

Hong Kong-listed terminal operator Cosco Pacific will be taking over all the port and terminal assets of China Shipping.

All the bulking shipping assets of both China Cosco and China Shipping Development, its subsidiary CS Bulk, will be sold to the former’s parent Cosco Group.

CSD will acquire tanker and LNG shipping firm Dalian Ocean from Cosco to become a company focused on tanker and gas shipping.

Commenting on the reasons behind the mergers of different business in Cosco and China Shipping, China Cosco said it aimed to maintain the stability and rapid development of its businesses. "Through this transaction, the listed company aims to focus on its two main businesses – container shipping and terminal service, switch from business diversification to specialization, expand operation scale and increase its competitiveness and sustainable operation capacity in the international market. After this transaction, the Listed Company will see decreased asset-liability ratio, stable liquidity ratio and quick ratio and further optimize its asset-liability structure, which is beneficial to the long-term interests of its shareholders," it said.

China Cosco, Cosco Pacific, CSCL and CSD have all lifted a trading halt on the shares on the Hong Kong Stock Exchange which had been in place since news broke of the possible merger in August.

A trading suspension has also been lifted on Singapore-listed Cosco Corp, which owns 51% of Cosco Shipyard Group. In a statement to the Singapore Exchange it said the restructuring did not involve the company’s business segments at this time.