COSCO Shipping to buy OOIL for $6.3 billion

A COSCO container is seen at the Noatum container terminal near Bilboa, in Santurtzi, Spain June 14, 2017.[Photo/Agencies]

COSCO Shipping Holding Co Ltd, a subsidiary of China COSCO Shipping Corp Ltd, will purchase a majority stake in Orient Overseas International Ltd(OOIL) for $6.3 billion, creating a global shipping giant, Reuters reports Monday.

COSCO Shipping, together with Shanghai International Port (SIPG), agreed to buy a combined 68.7 percent stake from OOIL's controlling shareholders, giving COSCO?Shipping and SIPG?a 90.1 percent and 9.9 percent stake respectively.

The offer price was HK$78.67 per share, a 37.8 percent mark up on OOIL's Friday closing price of HK$57.10 on the Hong Kong Exchange.

The total price tag for the deal will be HK$49.2 billion ($6.3 billion), the companies said in filings with the Hong Kong and Shanghai stock exchanges.

Once the deal is finalized, COSCO Shipping will have a fleet of more than 400 vessels and capacity exceeding 2.9 million TEUs (twenty-foot equivalent units), making it the world's third largest container shipping line after Denmark's Maersk Line and Switzerland's Mediterranean Shipping Company.

The transaction is subject to an anti-trust review by Chinese, European and United States authorities, the filings said.

In January, Chinese media outlet Caixin reported COSCO Shipping was bidding for OOIL, the seventh largest container shipping company in the world and owner of Hong Kong's biggest container-shipping line. However, the two companies later dismissed merger rumors.

Shares of COSCO Shipping, which was created from China Ocean Shipping (Group) Co and China Shipping Group, have been suspended since May 16.

Agencies contributed to this story.