Maersk Acquiring Hamburg Süd!
It came out over Thanksgiving weekend that the major carrier Hamburg Süd could be up for sale.
Immediately, speculation began about who would acquire the company with the names of other carriers in the international shipping industry like Hapag-Lloyd and CMA CGM being thrown around. Of course, the frontrunner in the rumor mill was A.P. Moller Maersk, the world’s largest carrier by capacity, which recently announced a new strategy of acquiring competing carriers.
It didn’t take long to confirm the frontrunner in all the speculation of a Hamburg Süd buyout really is buying the major, German-based carrier. The Loadstar reported today:
Maersk Line today announced it is to acquire Hamburg Süd in a cash deal one analyst claims could be worth up to $5bn.
“We estimate the takeover price in a range from $3bn-$5bn, which would increase Maersk’s leverage from 1.2x to around 1.6x full year 2017 EBITDA,” said Jeffries in a research note.
Maersk’s acquisition of the world’s seventh-biggest carrier would lift its capacity to 3.8m teu, from its current 3.1m teu, giving it an 18.6% global share.
This is the first big move from Maersk since it announced its change in strategy from ship ordering to competition acquisitions. In fact, the Wall Street Journal (WSJ) reported that Maersk hasn’t made a full-blown acquisition since 2005 when it bought P&O Nedlloyd.
This acquisition of Hamburg Süd is a huge move.
WSJ said that Hamburg Süd “had $6.7 billion in revenue in 2015,” although profit margins are not known as its private owner, the Oetker Group does not share profit/loss information. However, the carrier faces the same overcapacity and low freight rate struggles as the rest in the company. That likely played a large role in the Oetker Group’s decision to sell.
American Shipper gives a little more insight into Hamburg Süd’s size:
Hamburg Süd accounted for 49.5 percent of the Oetker Group’s 12.2 billion euro (U.S. $12.9 billion) in sales in 2015….
The family-owned company does not reveal information about profits and losses, but in a year-end commentary, Oetker said Hamburg Süd was able to increase its total revenues to 6.057 billion euros in 2015, 16.8 percent more than in 2014. The carrier also increased the number of containers it carried in 2015 to 4.1 million TEUs, 21.5 percent more than the prior year.
At the end of 2015, Hamburg Süd’s fleet consisted of 189 vessels, with 130 ships deployed in liner services, along with 59 bulk carriers and product tankers. Today, Alphaliner said the company has 117 containerships – 44 owned and 73 chartered – with an aggregate capacity of 602,908 TEUs. It also has eight containerships on order.
Hamburg Süd said it had 5,960 employees at the end of 2015, an 11.2 percent year-over-year increase, “primarily due to the expansion of the east-west trades, the acquisition of CCNI and organizational and IT projects.”
Hamburg Süd was on the outside looking in at the major carrier alliances taking over the international shipping industry, and that is bad place to be as a carrier right now. Therefore, the sudden selling of the carrier that WSJ says “traces its roots back more than 100 years” is not that shocking. It is just one more example of the shrinking competition pool for carriers in the international shipping industry.