Bowing to months of investor pressure, German company TUI, Europe's biggest tourism group, has put the for sale sign on Hapag-Lloyd, the world's fifth-largest container carrier, so it can concentrate on expansion in the tourism trade.
"Tourism is and remains our core business," Michael Frenzel, TUI CEO, said at its annual press briefing.
Despite a strong performance from Hapag-Lloyd in 2007 following a difficult integration of CP Ships, TUI's shareholders "would clearly give preference to further growth in tourism," said Michael Frenzel, TUI CEO. "Continuing to expand both business areas at the same pace would pose an excessive strain on our group's internal financing strength, in particular since we will have to invest significantly in shipping over the next few years in order to keep pace with market growth."
"All options for a separation of shipping should be explored," said Frenzel. "These include a spin-off, a potential merger or a divestment as one single entity."
Investors, analysts, bankers and rival shipowners were sketching possible scenarios within hours of the announcement. A merger with another carrier emerged as the most likely outcome - one that is sure to spur further consolidation of the container shipping industry.
One likely scenario is a merger with or takeover by Neptune Orient Lines. Hapag-Lloyd executives have been talking informally with their counterparts at the Singapore-based carrier for several weeks about a possible tie-up. In addition, NOL is one of the few top container lines known to be seriously considering an acquisition.
TUI wasn't ruling anything out. "There are no talks with NOL," Frenzel said. "But we are open to the company (NOL) and are waiting to see whether there will be concrete talks."
Shortly before TUI's announcement of the spin-off plan, Klaus-Michael Kuehne, majority shareholder of Kuehne + Nagel International, was named a member of a German investor group that is considering a bid for the carrier. The group's goal: to keep it "an independent shipping company based in Hamburg¡¯¡¯.
Other interested parties could have an important say in Hapag-Lloyd's future. The city-state government hasn't joined the Warburg group, but is still lobbying behind the scenes for a merger with privately held local rival Hamburg Sud that would protect Hapag-Lloyd's German identity.
The final word could go to the rebel shareholders led by Norwegian shipping magnate John Fredriksen, with a stake of just over five percent, who are looking for a good return on their investment.
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