Maersk and CMA CGM Eyeing Hamburg Süd

Container shipping giants Maersk and CMA CGM are the two frontrunners in the race for Hamburg Süd, but the high asking price could prove to be the main stumbling block, according to container shipping analyst Alphaliner.

The potential sale of Hamburg Süd is attracting interest among top-tier ocean carriers, Alphaliner said.

The largest obstacle to a potential deal is a price tag of close to USD 5 billion the Oetker family, which controls 100% of Hamburg Süd, reportedly put on the German north-south trade specialist.

The Oetker family had previously been unable to reach a consensus on whether to sell the company or not, Alphaliner said. However, the increasingly difficult north-south trade conditions and the disappearance of similar mid-sized carriers may have prompted the family members to reconsider their positions, with a decision expected to be made shortly, according to Alphaliner.

The decision will have to be made quickly, as Hamburg Süd is at risk of being left behind by the wave of consolidation among competing carriers, as well as by the formation of new east-west alliances in which the German carrier will not participate, Alphaliner said.

Hamburg Süd’s current east-west trade lot arrangements with UASC, COSCO and APL are all expected to be terminated by April 2017, and the carrier may be forced to downscale its involvement in the east-west trade, should its owners choose to stay in the shipping business.

Hamburg Süd’s shipping operations, including its liner and tramp shipping operations, accounted for 49.5% of the Oetker Group’s total turnover in 2015.

The privately-held Oetker Group does not publicly report full financial results, apart from overall turnover numbers.

Total turnover from liner shipping operations, after adjustment for foreign exchange losses, has been declining since 2013, when it hit a peak of USD 6.4 billion, according to Alphaliner.

Turnover dropped to USD 6.32 billion in 2014 and USD 6.26 billion in 2015, despite the inclusion of Compañía Chilena de Navegación Interoceánica’s (CCNI)liner shipping activities since March 2015.

The total value of ships and container assets on the Oetker Group’s books is listed at USD 2.19 billion as at the end of 2015.

The carrier has very little debt on its books and any potential buyer will have to fork out cash to acquire Hamburg Süd, as there would be little appetite for a non-cash/share offer for the highly independent Oetker Group, Alphaliner said.