Hapag-Lloyd AG agreed to buy most of Chilean rival Cia. Sud Americana de Vapores SA's assets and become the fourth-largest container shipping company in the world.

CSAV, controlled by Chile's billionaire Luksic family, will own a third of the shares in the new company that combines Hapag-Lloyd's 151 vessels with CSAV's fleet of about 50, according to a Chilean regulatory filing yesterday. The Luksics, German billionaire Klaus-Michael Kuehne and the City of Hamburg will own 75.5 percent and control the new company.

Kuehne and the Luksics are combining to compete on more equal terms with industry leader A.P. Moeller-Maersk A/S after an oversupply of vessels coincided with slowing demand to produce a prolonged slump in container shipping. The global financial crisis slowed trade and caused the worst decline in prices for carrying cargo since containerization became global in the 1970s.

"The combination with CSAV, Latin America's leading container shipping line, considerably strengthens Hapag-Lloyd in this growth market and adds a strong position in the North-South traffic and to its established strength in East-West traffic," CSAV Chief Executive Officer Oscar Hasbun said in a statement.

Hapag-Lloyd, which had a loss of 97.4 million euros ($135 million) last year, will reap annual savings of about $300 million, Hasbun said on March 21. The companies signed a memorandum of understanding in January. The combination creates a company with annual revenue of about $12 billion.
IPO Plans

Hapag-Lloyd CEO Michael Behrendt, who retires at the end of June, has said an IPO may take place in 2015 once conditions in the shipping industry normalize. German tour operator TUI AG (TUI1), which holds a 22 percent stake in Hapag-Lloyd, may use the stock sale as an exit, as the Hanover-based company has repeatedly said it wants to divest the holding.

TUI shares rose as much as 6.8 percent, the biggest intraday gain in 15 months, and traded at 12.10 euros, up 6.4 percent, at 11:48 a.m. in Frankfurt, valuing the company at 3.05 billion euros.

With the deal reducing its stake to 13.9 percent, TUI is getting closer to leaving the container shipping business, CEO Fritz Joussen said in an internal statement obtained by Bloomberg News. TUI has a "binding understanding" with the other Hapag-Lloyd shareholders to list the shipping company next year and has the right to sell stock in a private placement in the run-up to the IPO, Joussen said.
Opportune Time

The merger won't dilute the value of TUI's stake, and might be a "good opportunity to sell for a good price," Jochen Rothenbacher, an analyst at Equinet Bank AG in Frankfurt, said in a note to clients today.

CSAV will buy shares worth 259 million euros in a 370 million-euro capital increase that will boost its stake in Hapag-Lloyd to 34 percent from about 30 percent. The German company will carry out a second sale of new stock for 370 million euros coinciding with the IPO on the German exchange.

Shares in CSAV rose 0.5 percent yesterday to 27.7 pesos in Santiago.