SHANGHAI / HONG KONG (Reuters) – COSCO Shipping Holdings Co Ltd saw its rise on Monday, having offered 6.3 billion Hong Kong counterpart, an agreement to see it become the largest exporter of third-world containers and Emphasize the ambitions of China’s supply chain.
The offer provided by Orient Overseas International Ltd (OOIL) is gradually being produced as the Chinese government increases the country’s profile in the field of global navigation, which is part of the initiative of the belt and the road increase China’s influence In the distribution of Asia to Europe.
Beijing has merged two shippers last year to form COSCO shipping, which after the last transaction, will be produced fourth only behind the line of Maersk of Denmark and the shipping Co Mediterranean (MSC) in Switzerland.
“It’s negative for Maersk and MSC,” said Corrine PNG, CEO of Crucial Perspective, Transportation Researcher in Singapore. An agreement would make the Chinese shipper a “more difficult competitor to deal with in the main trade routes.”
The state-backed COSCO shipment on Sunday offered to buy each OOIL share at a premium of 31.1 percent at the close on Friday.
The stock of a contractor often falls after making a bid, but Hong Kong-listed shares for COSCO shipment rose 6% Monday to its highest price in nearly two years. The OOIL stock lifted as usual for a target, but at 20 percent, which was lower than the bid price.
Png said some investors believe that OOIL sell too soon after the container industry began to recover from a prolonged recession or that the deal is not approved by the competition authorities.
“The transaction is a sweeter deal for COSCO and OOIL shareholders,” he said. “OOIL could boost COSCO’s recurring profit by 50 percent over the next two to three years.”
The agreement arises when the state of Hong Kong’s transportation hub is low. His fortune was lifted with the Pearl River Delta export boom in the 1990s, but it is a globally threatened port in the fifth debt behind the mainland ports of Shanghai and Shenzhen.
COSCO said it would keep the OOIL head office in Hong Kong, but analysts said the port city would still be affected by its recovery.
“COSCO also has investments (port) in Guangzhou,” said Han Ning, Chinese director of Drewry Shipping Consultants, referring to the Chinese city near which the port is competing with Perla Hong Kong river traffic. “So if COSCO examines what should be its center to the Pearl River Delta, it will try to strike a balance between Guangzhou and Hong Kong.”
OOIL controls a little less than 3 percent of the global container shipping market and has significant exposure to the US market. After the transaction, COSCO shipment can expect a market share in the United States to 18 percent from 11 to 12 percent today, COSCO CEO Zunwu Xu said at a news conference on Monday. The acquisition will also strengthen COSCO’s position in shipping port activity, Xu said.
“The merger is complementary because OOIL is strong in transpacific and intra-Asian and China COSCO has strong domestic trade,” said Samson Lo, head of mergers and acquisitions in Asia at UBS, which advises COSCO shipping.
“The terminals and OOIL logistics companies can also bring other COSCO synergies.”
COSCO shipment made its offer with Shanghai International Port Co Ltd. The shipping company announced that it will fund the operation with a bridge loan.