China Shipping Merger Erases $900 mln in Market Value

By Aiswarya Lakshmi
Monday, December 14, 2015

 Shares of Cosco Group and China Shipping have taken a hammering on the stock markets  as two major companies lost about $900 million in total market value after the government proposed combining its two key ocean liner groups, reports Bloomberg.

China’s shipping giants led the declines with drops of as much as 30 percent, the most on an intraday basis in more than 10 years. The shares had been halted from trading since August pending an announcement by their parent companies.
Cosco  shares have been suspended from trading since August 11, after it was reported that its majority shareholder Cosco Group is eyeing a privatisation exercise for the struggling shipping company. It appears that investors punished the shipping company after a much-awaited privatisation deal with its parent company fell through last week.  
As reported earlier,  China's state cabinet Friday approved the merger between China Ocean Shipping (Group) Co., (Cosco Group), and China Shipping (Group) Co., paving the way for a combined entity that will be the world's fourth-biggest container shipping line, the WSJ reports.
In Singapore, Cosco’s shipbuilding arm Cosco Corporation (Singapore) is down 16% to be trading at S$0.31.
China COSCO will transform from a container and dry bulk player to a pure container liner, through acquiring China Shipping Container Lines’ operations.
In an exchange filing, China Cosco Holdings Co. said it will consolidate its container-shipping operations by acquiring 33 China Shipping Container Lines Co. (CSCL) container-shipping related units and affiliate for 1.14 billion yuan ($177 million).
China COSCO proposes to lease and operate container vessels and containers owned or operated by China Shipping Container Lines; to acquire shares of 33 agency companies from China Shipping Container Lines for a consideration of approximately RMB1.14 billion (subject to adjustment); to dispose of its dry bulk shipping business to COSCO for a consideration of approximately RMB6.77 billion (subject to adjustment). Upon completion of the transactions, China COSCO will become a listed platform specializing in container shipping services.
COSCO Pacific proposes to acquire China Shipping Ports Development Co., Ltd., held by China Shipping (H.K.) Holdings Company Co. Ltd. and China Shipping Container Lines for an initial consideration of RMB7.63 billion (subject to adjustment); dispose of Florens container leasing business to China Shipping Container Lines for an initial consideration of RMB7.78 billion (subject to adjustment). Upon completion of the transactions, COSCO Pacific will become a listed platform focusing on developing global port business.
Categories: Bulk Carriers Container Ships Finance Legal Mergers & Acquisitions Vessels

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