Shareholders of Chilean container shipper Compania Sud Americana de Vapores are set to approve later this month a merger with German peer Hapag-Lloyd, and a binding agreement will be sealed by early April that will create the world's fourth largest container shipping company in terms of capacity, people with knowledge of the deal said.
"CSAV shareholders will vote to approve the tie-up March 21. We expect that they will give their full backing and, barring last-minute complications, final signatures will come by late March or early April," one of the people said, reported Dow Jones Newswires.
CSAV is controlled by the Luksic family, one of Chile's richest.
Hapag-Lloyd declined to comment on the process and CSAV couldn't immediately be reached for comment.
The two sides signed in January a non-binding memorandum of understanding on the merger and are currently conducting due diligence.
In an earlier disclosure to the Santiago Stock Exchange in Chile, CSAV said it would take an initial 30 percent stake in Hapag-Lloyd, making it the largest shareholder in the Hamburg-based company. The deal calls for two capital increases totalling US$1 billion, and the merged entity will have annual revenue of around $12 billion.
Big mergers are rare in the container-shipping industry, which moves 95 percent of all manufactured goods. The industry is dominated by families and sovereign-wealth funds, typically better equipped than publicly traded firms to endure years of losses during long down cycles.
But recently, pressure for consolidation has strengthened ahead of the expected launch later this year of an alliance between Denmark's A P Møller-Maersk, Switzerland's Mediterranean Shipping Co. and France's CMA CGM, the industry's top three players in terms of capacity. The alliance, called P3, would control about half the market share of the world's busiest trade routes.
Two earlier attempts by Hapag-Lloyd to merge ultimately foundered – its 2008 proposed tie-up with Singapore's Neptune Orient Lines, and last year's talks with fellow German shipper Hamburg Süd.
Hapag-Lloyd operates about 150 ships, competing head-on with the P3 partners on the Asia-Europe, transatlantic and transpacific routes. CSAV operates about 50 vessels.
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