South American carrier Compañía Sud Americana de Vapores (CSAV) is planning two capital increases in preparation for a possible merger with European counterpart Hapag-Lloyd.
The Chile-based container line will launch first a US$200-million drive next month to fund seven 9,300-TEU ships being built by Samsung Heavy Industries and execute the other requirements of the tie-up.
If the merger pushes through, CSAV will undertake the second capital increase, raising between $200 million and $400 million to take part in Germany-headquartered Hapag-Lloyd’s own EUR370 million capital increase to finance the closing of the union.
Hapag-Lloyd and CSAV signed in January this year a nonbinding memorandum of understanding that would form the world’s fourth largest container shipping line.
Hapag-Lloyd operates about 150 ships, deployed on the Asia-Europe, trans-Atlantic, and trans-Pacific routes. CSAV, a moderately sized player in South America, operates about 50 vessels. The combined entity will have a capacity of one million standard containers, with annual revenue placed at around US$12 billion.
The two companies started exploratory negotiations in December 2013 to find a way to surmount differences and join forces operationally.
Experts say the collaboration between the two makes sense operationally because there is little service duplication, so both carriers would benefit from improved economies of scale and geographic scope.
Photo: 401(K) 2013
