Major merger in container shipping upcoming
published: cw 19, 2005 in Mergers & acquisitionsRoyal P&O Nedlloyd and A.P. Moller - Maersk A/S both informs that they are in discussions with each other regarding a possible combination of the companies. There can be no certainty as to whether these discussions will result in an offer being made by A.P.-Moller-Maersk for Royal P&O Nedlloyd. Further announcements will be made as appropriate.
When P&O Nedlloyd will incorporated by Maersk, then this will be the biggest take-over in container shipping ever. Maersk worldleader in this market, currently with a market share of 12%, will then be twice as big as the next compatitor, the Swiss Mediterranean Shipping Company (MSC, 8%). P&O is currently the number 4, with a market share of 6,5%.
Although most of the big container lines have huge orderbooks that will greatly increase capacity over the next few years, there is little scope for more organic growth through fleet expansion until 2009 because most of the world?s big shipyards are full. That leaves growth through acquisition, with both P&O Nedlloyd and AP Moller-Maersk openly saying in recent months that they were in favour of more industry consolidation.
Due to the increased trafic with China, Maersk and P&O Nedlloyd almost all container lines took advantage of the limited capacity in container availability and increased their prices. The resulting higher margins delivered the capital needed for take-overs.
If P&O Nedlloyd is taken over, it would have far-reaching consequences throughout the industry. More immediately, there would be a question mark over the five-member and highly integrated Grand Alliance (P&O Nedlloyd, Hapag-Lloyd, Orient Overseas Container Line, NYK Line and Malaysia International Shipping Corporation) that is about to confirm its summer sailing schedules.
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