Germany’s Hapag-Lloyd has agreed merger terms with United Arab Shipping Company, a Middle Eastern enterprise, as shipping lines consolidate amid a drop in freight rates.
The merger talks between the two companies began in April.
“Hapag-Lloyd and UASC have reached an agreement on the terms and conditions of a business combination agreement (BCA) providing for the contribution of all shares in UASC to Hapag-Lloyd,” the German shipper said in a statement on Tuesday.
The supervisory board approved the agreement, but the conclusion of the merger is contingent on receiving shareholder approval from both companies.
UASC shareholders are to meet on Wednesday, at an extraordinary general meeting to grant their approval, the statement said.
Hapag-Lloyd is publicly listed, while UASC is privately owned.
Hapag-Lloyd, which has a fleet of 175 vessels, swung to a first-quarter loss of €42.8 million (Dh173.9m), compared with a €128.2m gain in the same period a year earlier, because of a 20 per cent year-on-year drop in freight rates that cancelled out cost cuts.
The merger is part of a consolidation wave in the industry, which is suffering from low rates and shipping overcapacity as trade flows stagnate.
Growth in the volume of world trade is forecast by the World Trade Organisation to remain low this year at 2.8 per cent, unchanged from the 2.8 per cent increase recorded last year.
This year is projected to be the fifth in a row of trade growth below 3 per cent.
dalsaadi@thenational.ae
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