Hapag-Lloyd And CSAV Merger MOU Expected Within Weeks
German and Chilean Companies Could Form Fourth Largest Container Shipper
LONDON—A deal to bind merger talks between German container shipper Hapag-Lloyd AG and its Chilean peer Compañía Sud Americana de Vapores SA VAPORES.SN -2.48% is expected to be signed by early February, according to people familiar with the matter, as both sides haggle over the shareholding structure in the prospective combined company.
The merger, which would create the world's fourth-largest container shipper, with annual revenue of around $13 billion, has moved ahead in fits and starts since the two companies acknowledged negotiations back in December.
"If no major disagreements emerge, we should have [a memorandum of understanding] signed within the next three weeks or so," said one person familiar with the talks. The two sides are still negotiating how much each will hold in the merged entity and whether CSAV's ships will be part of the deal or be leased to Hapag-Lloyd, this person said.
If an MOU is signed the companies will then proceed to due diligence and the merger could be completed some time in the first quarter.
Under current talks, the Luksic family, one of Chile's richest, and CSAV's main shareholder, will become a major holder in Hapag-Lloyd with a stake close to that of German billionaire Klaus-Michael Kühne, who owns 28% of the Hamburg-based shipper, according to another person involved in the deal. The Luksics started buying into CSAV in 2011 and now control 46% of the company.
As previously reported, the German company will control 70% of the merged entity, with CSAV owning the remainder, based on current discussions. Hapag-Lloyd and CSAV declined to comment on the progress of the talks.
Big mergers are rare in the container-shipping industry, which moves 95% of all manufactured goods. The industry is dominated by families and sovereign-wealth funds, typically better equipped than publicly traded firms to endure years of losses during long down-cycles. But recently, pressure for consolidation has strengthened ahead of the expected launch later this year of an alliance between Denmark's A.P. Møller-Maersk MAERSK-B.KO -0.61% A/S, Switzerland's Mediterranean Shipping Co. and France's CMA CGM SA, the industry's top three players in terms of capacity. The alliance, called P3, will control about half the market share of the world's busiest trade routes.
Two earlier attempts by Hapag-Lloyd to merge ultimately foundered—its 2008 proposed tie-up with Singapore's Neptune Orient Lines, N03.SG -0.95% and last year's talks with fellow German shipper Hamburg Süd.
Hapag-Lloyd operates around 150 ships, competing head on with the P3 partners in the Asia-Europe, trans-Atlantic and trans-Pacific routes. CSAV operates around 50 vessels.