Danish container-shipping company A.P. Moeller-Maersk is buying its Dutch rival, P&O Nedlloyd for 2.3 billion euros ($3 billion) in cash to lock down its industry leadership.
The combined company will employ about 70,000 people, and have 550 vessels. They plan to cut 1,500 jobs over the next three years but have not disclosed the amount of money that will be saved.
P&O Nedlloyd’s board is said to be supportive of Maersk’s 57 euros per share offer. “They are buying to defend their position as the top market player,” said Finn Bjarke Pedersen an analyst with Nordea Securities. “The price is high, but I’m sure that Maersk will make the investment profitable.”
Bloomberg News givessome background info on the takeover:
The takeover, the shipping industry’s biggest ever, would give A.P. Moeller more than twice the capacity of No. 2 rival Mediterranean Shipping Co. and add clout in contract talks with customers such as Wal-Mart Stores Inc. Freight rates, which have soared during a boom in Chinese exports, may decline next year as fleets expand, say analysts including London-based Drewry Shipping Consultants Ltd.
A.P. Moeller operates about 400 container ships, controlling 12 percent of the global market. The combined company would have 17 percent, according to London-based shipbroker Braemar Seascope Group Plc. A.P. Moeller said it will make a formal offer to P&O Nedlloyd shareholders next month.
Some shareholders may be hoping for a bid war to get an even higher offer, since P&O Nedlloyd CEO Philip Green mentioned that reviewing another offer was not out of the cards. P&O Nedlloyd, however, has allegedly already called off other companies who would potentially bid.
P&O Nedlloyd shares shot up 22% and reached a record high after the announcements from the companies. Maersk shares rose 1.1% to 55,200 Danish crowns.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
