Cosco and Shanghai International Port Group to buy Hong Kong's OOIL

19th July 2017

COSCO Shipping Holdings and Shanghai International Port (Group) as well as Orient Overseas (International) Limited have announced that Cosco and SIPG have made an offer to buy Hong Kong's premier shipping company OOIL reportedly for US$6 billion, or HK$78.67 (US$10.07) per share in cash, a offer which has been accepted by the majority shareholder.

The controlling OOIL shareholder, who holds 68.7 per cent, has "irrevocably undertaken to accept the offer", said the joint statement.

Under the deal, levels of compensation and benefits will be retained at OOIL, said the joint statement, and no one will be laid off as a result of the merger for two years.

On completion, assuming all OOIL shareholders tender their shares, Cosco Shipping Holdings will hold 90.1 per cent, while SIPG will hold 9.9 per cent of OOIL.

The deal depends on regulatory approvals as well as approval from Cosco Shipping Holdings shareholders.

The transaction marks the latest consolidation in the global maritime industry. It is believed that the combination of Cosco Shipping Holdings and OOIL can deliver a stronger competitive advantage.

OOIL is the seventh largest container shipping company in the world, with extensive container shipping routes and networks. The combined Cosco Shipping Lines, a unit of Cosco Shipping Holdings and OOIL will operate more than 400 vessels of 2.9 million TEU including orderbook.

Cosco Shipping Lines and OOIL will continue to operate under their respective brands. Both companies are members of the Ocean Alliance, and will continue to work together under this framework.

"We respect OOIL's management team and its expertise, not to mention its people, brand and culture," said Cosco Shipping Holdings chairman Wan Min.

"Our company remains committed to enhancing Hong Kong as an international shipping centre. Following completion, we will continue to invest and strengthen our industry leadership, providing a more extensive platform for the employees of OOIL to excel," said Mr Wan.

Said OOIL executive director Andy Tung: "We are proud of the business we have built and the people who have been building it. This decision has been carefully considered and we believe it helps ensure the future success of OOIL.

"We are confident that Cosco Shipping Holdings is the right partner for us," said Mr Tung.

The board of directors of OOIL has established an Independent Board Committee to advise the shareholders of OOIL in connection with the offer. An independent financial adviser will be appointed.

UBS is the financial adviser and Paul Hastings is the legal adviser to Cosco Shipping Holdings, while UBS Securities is the independent financial adviser to Cosco Shipping Holdings. JP Morgan is the financial adviser and Slaughter and May is the legal adviser to OOIL.

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