CSAV Shares Sink On Hapag-Lloyd Merger Deal

By Matt Craze and Eduardo Thomson

Jan. 23 (Bloomberg) — Cia. Sud Americana de Vapores SA fell the most in more than two years after the Chilean shipping company reached an agreement to combine operations with Germany’s Hapag-Lloyd AG.

The shares slumped 12 percent to 29.1 pesos at 4:43 p.m. in Santiago, the biggest fall since September 2011. The shares had advanced 31 percent since Dec. 3, the day before the company, controlled by Chile’s billionaire Luksic family, confirmed it was in talks with Hapag-Lloyd about a merger to form the world’s fourth-largest container shipping company.

CSAV will own 30 percent of the new company and will join German billionaire Klaus-Michael Kuehne and the city of Hamburg to control a total of 75.5 percent. The companies plan two capital increases of 370 million euros ($507 million) each, and CSAV will also seek to raise another $200 million to buy new ships. The shares fell on concern minority investors will see their stakes cut by the capital increases, according to Arturo Curtze, an analyst at asset manager VanTrust Capital.

“It’s not the first time that CSAV surprises the market with more and more capital increases,” Curtze said in a phone interview from Santiago.

The companies, which both date back to the 19th century, are struggling to overcome a prolonged slump in the container shipping market and compete with larger rival A.P. Moeller- Maersk A/S. The Luksics, Chile’s wealthiest family, took a bet on the industry in 2011 when they began building a stake in CSAV. The combined company will have revenue of $12 billion a year, CSAV said.

Tie-up Savings

Hapag-Lloyd currently operates a fleet of about 150 vessels, or 4.1 percent of the global container shipping industry, according to data compiled by consultant Alphaliner. CSAV has 50 ships, or 1.5 percent of the global market. The tie- up will create savings of 300 million euros ($406 million), CSAV said yesterday.

Maersk is the world’s biggest cargo-box carrier with 14.6 percent of the global fleet. Switzerland’s Mediterreanean Shipping Co. has 13.3 percent and CMA CGM SA has 8.5 percent, according to Alphaliner.

CSAV didn’t say if it will dissolve its Santiago listing as part of the deal or what terms will be offered to minority shareholders.

“Hapag isn’t a listed company, so that is causing concern among analysts about how to value the deal,” German Guerrero, a partner at Santiago-based brokerage MBI Inversiones, said in a telephone interview today.

Hapag-Lloyd may hold an initial public offering as part of the second transaction, CSAV said.

Asia Routes

Tour operator TUI AG still plans to list its 22 percent stake in Hapag-Lloyd in an initial public offering, Natascha Kreye, a spokeswoman, said in an interview today. Hapag-Lloyd shareholders have delayed an IPO as they await improved market conditions, TUI Chief Executive Officer Friedrich Joussen said Sept. 27.

Kuehne, who controls Schindellegi, Switzerland-based Kuehne & Nagel, the world’s largest sea-freight forwarder, owns a 28 percent stake in Hapag-Lloyd. In June, Kuehne demanded a debate about Hapag-Lloyd’s future after merger talks with German rival Hamburg Sued fell through in March.

Hapag-Lloyd will strengthen its presence on Europe-Latin America and Latin America-Asia routes through the deal.

The Luksic family controls CSAV with a 46 percent stake. They have invested more than $1 billion in the company in the past two years after it lost a record $1.25 billion in 2011. The company hasn’t recorded a profit since 2010 and reported losses of $108 million in the first nine months of last year.

Guillermo Luksic, the oldest of three brothers that constitute Chile’s richest family, was chairman of CSAV until he died on March 28. Younger brothers Andronico and Jean-Paul appointed a non-family member, Francisco Perez Mackenna, as chairman.

The combination excludes CSAV’s bulk and liquid cargo assets.

Copyright 2014 Bloomberg.