Maersk May Target Hanjin, Hyundai in New Acquisition Strategy
A.P. Moeller-Maersk A/S’s container line, which this month ditched a strategy of building new vessels and will instead try to grow through acquisitions, is targeting South Korea’s two biggest shipping firms, according to Jefferies International Ltd.
Hanjin Shipping Co.filed for bankruptcy protection in August, and Hyundai Merchant Marine Co. is in the middle of a creditor-led debt-restructuring program. Both are in need of a strong partner and Maersk Line, the world’s biggest, is probably the only rival with the financial muscle to manage a takeover, David Kerstens, Jefferies’s transport analyst in London, said in an interview.
“Maersk, as the market leader, will definitely participate in the consolidation — they will have to,” Kerstens said. But “the takeover options for Maersk are fairly limited, as most container lines are already tied up in alliances or are family or government-controlled," Kerstens said.
"The most likely scenario is that Maersk would take over the assets of Hyundai and Hanjin." he added.
RELATED: Maersk to split group into separate transport, energy companies
Maersk Chairman Michael Pram Rasmussen revealed the Week of Sept. 19 that the company’s container line — long a pioneer in ship building — will pursue takeovers to avoid flooding the market with new vessels. He declined to comment on Hanjin Shipping and Hyundai Merchant. Spokespeople from the two Korean companies also declined to comment.
After years of surplus capacity and declining freight rates, the container shipping industry is in dire need of further consolidation if it is to weather a slowdown in global trade growth. Liners already have responded with mergers and formed vessel-sharing alliances to cut costs, but more needs to happen.
“There’s been a lot of consolidation this year, and many of the container lines just behind Maersk have grown,” Kerstens said. “So Maersk is faced with substantially stronger competition.”
RELATED: Hyundai Merchant said to be looking at buying Hanjin assets
Maersk Line, which hasn’t made a large acquisition in more than a decade, is in an alliance with the world’s No. 2, Mediterranean Shipping Co., while Hyundai Merchant is in talks to join the venture.
Hyundai Merchant has about 2% of the global market while Hanjin Shipping had about 3%, approximately half of which was chartered vessels.
Kerstens, and fellow analyst Rahul Kapoor at Drewry Financial Research Services Ltd., said Maersk would be more interested in buying Hanjin Shipping’s vessels rather than the entire bankrupt company. The South Korean firm’s containerships are worth about $1.4 billion, according to VesselsValue.
South Korea’s government said last week it is drawing up plans to improve competitiveness in the shipping industry and to help Hyundai Merchant transport exports as the country’s sole flag carrier. Among plans being considered are whether to help the company purchase “affordable” vessels or to order new ships, Vice Minister of Oceans and Fisheries Yoon Hag-bae said Sept. 23.
Maersk Line, which as market leader controls about 15% of the world’s container capacity, only ranks third in Trans-Pacific trade, where it ships 8%. Buying Hanjin Shipping and Hyundai Merchant would double its market share on that route, Kerstens said.
“For Maersk, it will be most interesting to buy something that complements its current network and it’s in particular the Trans-Pacific trade where Maersk’s market position is relatively weaker,” he said.
