Shanghai-Express-hapag-lloyd-ship

The “Shanghai Express” (7,500 TEU) at the CTA in Hamburg, image: Hapag Lloyd

Julie Cruz

TUI AG rose in Frankfurt after its shipping unit Hapag-Lloyd said it is discussing a possible merger with Hamburg Sud.

TUI shares advanced as much as 2.6 percent and traded up 1.3 percent, or 10 euro cents, to 7.95 euros as of 12:40 p.m. local time. Hapag-Lloyd, based in Hamburg, is investigating “if and under what conditions a merger of the two companies would make sense,” according to a statement from the company today.

TUI Chief Executive Officer Michael Frenzel, who will be replaced in February by Friedrich Joussen, has been trying to focus the company on tourism by putting units such as shipping up for sale. Earlier this year, the German city-state of Hamburg increased its stake in Hapag-Lloyd to 37 percent by buying a part of TUI’s holding. Hapag-Lloyd reported a loss for the first nine months of 2012 as overcapacity, falling demand and low freight rates eroded earnings.

TUI will probably support the deal because it would “crystallize the value of its Hapag stake and could potentially also be a way of disposing the remaining stake,” Johannes Braun, a Frankfurt-based analyst at Commerzbank AG, said in an e-mailed statement. “As such, it should be taken positively, although a complete assessment of such a deal depends on financial details not yet available,” he said.

Hamburg is a member of the Albert Ballin group, which also includes billionaire shipping magnate Klaus-Michael Kuehne, Signal Iduna, Hanse-Merkur, M.M. Warburg & Co. and HSH Nordbank AG, and which in total holds 78 percent of the shares in Hapag- Lloyd, Europe’s fourth-largest container line. TUI owns the remaining 22 percent.

TUI’s stock has gained 66 percent this year.

Hamburg Sud, which was founded in 1871, is one of the leading shipping providers in the north-south trades, according to its website. It is part of the Oetker Group.

Copyright 2012 Bloomberg.
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