Battle Heats up for Hamburg Port Operator as MSC Makes Offer

BERLIN, Sept 13 (Reuters) – MSC, the world’s biggest container shipping company, has offered to buy almost half of the main operator of Hamburg port in a deal that could be worth nearly 1.3 billion euros ($1.4 billion), setting the stage for a potential bidding war.

Shares in HHLA, which runs Germany’s biggest port, soared 49% to a 19-month high on Wednesday as shortly after the announcement German logistics billionaire Klaus-Michael Kuehne said he was considering a counter offer.

Under the deal between Switzerland-based MSC and the city of Hamburg, MSC will make a cash offer of 16.75 euros ($17.99) per share to acquire all listed class A stock in HHLA.

That is well above Tuesday’s closing share price of 11.54 euros and, if the offer is taken up in full, would give MSC a 49.9% stake in HHLA at a cost of about 1.26 billion euros, according to Reuters calculations.

The city of Hamburg, which currently owns 69% of HHLA’s A shares and all of its unlisted S-shares, would retain control of Hamburg port with a 50.1% stake via the S-shares.

A source familiar with the deal gave an enterprise value of 2.6 billion euros, including 1.4 billion euros in debt.

Kuehne, who has previous expressed interest in taking over HHLA, told the FAZ newspaper he would make a counter bid via his holding company if Hapag, in which he owns a 30% stake, did not respond with its own offer.

“I can only strongly advise Hapag-Lloyd to make a takeover bid for 49.9% of HHLA shares itself and immediately,” he said in the newspaper interview.

Hapag-Lloyd did not comment on a potential bid, saying only that the deal would “not affect our cooperation with HHLA”.

A company source told Reuters that the fact Hapag-Lloyd would essentially be paying terminal fees to its biggest competitor under the deal was an “affront”.

BIDDING FRAY

If Hapag were to join the bidding fray, “it would certainly be an uphill battle,” analyst Marc Zeck of the Stifel investment bank told Reuters, pointing to the difference in size between it and MSC, as well as the additional volume MSC could commit to.

Nikolas Mauder of Kepler Cheuvreux said there were concerns about “a wall” of capital expenditure needed at HHLA, which like other German ports is facing major challenges amid weak foreign demand and fierce competition with Belgian and Dutch counterparts.

HHLA earlier this year sold a stake in one of its three terminals in Hamburg port to Chinese shipping firm Cosco 601919.SS, in a deal that was met with protests within Germany’s government coalition and from abroad over concerns about increasing Chinese influence.

“MSC is a Swiss company, Switzerland, unlike China, is integrated into a European economic order, where there is no need to check whether investments violate safety and order,” Economy Minister Robert Habeck said after a cabinet meeting in Berlin.

HHLA said its management board would review MSC offer.

($1 = 0.9312 euros)

(Additional reporting by Andrey Sychev in Gdansk and Sabine Wollrab in FrankfurtWriting by Rachel MoreEditing by Jason Neely, Mark Potter and Emelia Sithole-Matarise)

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