Once again rumours are emerging that container shipping giant AP Moller-Maersk is set to buy diversified German transport and tourism operator TUI. This speculation has been doing the rounds for at least six months, but it has had sufficient momentum to push TUI’s share price over 5% higher over the past week.

Within Germany there has been considerable conjecture about the likelihood of a bid for TUI. The company has stumbled over the past twelve months leading to suggestions that it should be broken-up. However the fate of the company is complicated by declarations by local German politicians that the Hamburg conglomerate should be protected from a ‘hostile’ take-over through the establishment of a state holding in the company. This is something that its management wants to avoid.

What makes TUI an almost irresistible attraction to Maersk is that, wrapped up in a large but not wildly successful tourism business, is the world’s fourth largest container shipping company. Hapag-Lloyd itself is a medium-sized brand, but has been boosted by the acquisition of CP Ships in 2005. As a result if Maersk succeeds in acquiring Hapag it will put clear blue water between it and the competition in its bid for leadership of the container shipping market. However if Hapag-Lloyd falls into the hands of MSC or CMA-CGM then Maersk will have a serious rival.

Those counselling against the likelihood of a early bid by Maersk cite the difficulties that the company has had in digesting its acquisition of P&O Nedlloyd, difficulties that hit both sales growth and profits at the Danish company. This is undoubtedly a brake on Maersk’s actions. But it cannot hide the wider logic behind Moller-Maersk needing to continue its expansion by acquisition. In the present container shipping market you are either predator or prey.

TUI AG chief executive Michael Frenzel said he is opposed to the German state taking a stake in the tourism and shipping firm, but would welcome private investors that agree with his company’s strategy. “I want to keep the state out of TUI,” Frenzel told German daily Sueddeutsche Zeitung in an interview. In October, German media reported TUI had been negotiating with the German states of Lower Saxony and Hamburg over one or both of them acquiring shares in the firm to help fend off potential takeover threats. In the interview, Frenzel repeated earlier statements that TUI did not hold talks with Hamburg to that effect, and that it has has no intention to do so. But he said he would welcome like-minded private investors buying into TUI. “I would like to have investors that come from a private background, that have strategic interests and share our mindset,” he told the paper. Frenzel also said he expects to remain at the helm of TUI for at least another year, despite pressures from the markets over weak results at the group’s shipping operations. Asked by the newspaper whether he will still be CEO in a year from now, Frenzel said: “You can expect that.”

Sources: Transport Intelligence and AFX news

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