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COSCO Shipping to Buy OOCL for $6.3 Billion

COSCO Shipping Holdings Co Ltd has offered to buy Orient Overseas International Ltd (OOIL) for HK$49.23 billion ($6.30 billion), in a deal that will see the mainland China group become the world’s third largest container liner.

COSCO Shipping is offering HK$78.67 for each OOIL share, a premium of 37.8 percent over OOIL’s closing price of HK$57.10 on its last trading date, the companies said in filings with the Hong Kong and Shanghai stock exchanges on Sunday.

COSCO Shipping will have a fleet of more than 400 vessels and capacity exceeding 2.9 million TEUs (twenty-foot equivalent units) should the deal go through, it said.

On completion, assuming all OOIL shareholders tender their shares, COSCO SHIPPING Holdings will hold 90.1%, while SIPG will hold 9.9% of OOIL. The Offer is dependent upon the satisfaction of pre-conditions, which include the necessary regulatory approvals as well as approval from COSCO SHIPPING Holdings shareholders. The controlling shareholder, who currently holds 68.7% of OOIL, has irrevocably undertaken to accept the Offer.

The transaction marks the latest consolidation in the global maritime industry.

 

Both companies are members of the Ocean Alliance, and will continue to work together under this framework. “We respect OOIL’s management team and its expertise, not to mention its people, brand and culture,” said Mr. Wan Min, Chairman of COSCO SHIPPING Holdings. “Our company remains committed to enhancing Hong Kong as an international shipping center. Following completion, we will continue to invest and strengthen our industry leadership, providing a more extensive platform for the employees of OOIL to excel.” Mr. Andy Tung, Executive Director of OOIL, commented that, “We are proud of the business we have built and the people who have been building it. This decision has been carefully considered and we believe it helps ensure the future success of OOIL.

We are confident that COSCO SHIPPING Holdings is the right partner for us.” The Joint Offerors intend to maintain OOIL’s listed status following close of the Offer, and are committed to retaining the existing compensation and benefit system at OOIL and will not terminate the employment of any employee at OOIL as a result of this transaction for at least 24 months after the close of the offer. Besides that, the Joint Offerors intend to maintain OOIL’s global headquarter functions and presence in Hong Kong, and utilize the advantage of both companies’ global network to contribute to the economic prosperity of the territory and development of Hong Kong as an international shipping center.

The board of directors of OOIL has established an Independent Board Committee to advise the shareholders of OOIL in connection with the Offer. An independent financial adviser will be appointed. UBS AG is the financial adviser to the Joint Offerors and Paul Hastings is the legal adviser to COSCO SHIPPING Holdings, while UBS Securities is the independent financial adviser to COSCO Shipping Holdings. J.P. Morgan is the financial adviser and Slaughter and May is the legal adviser to OOIL.

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