A new episode of friend-shoring emerged on Wednesday, with majority state-owned German port operator Hamburger Hafen und Logistik AG (HHLA) unveiling a takeover offer by expanding logistics giant MSC Mediterranean Shipping Company.
If successful, the bid will see MSC ultimately own just shy of 50% of the diversified German company — in close cooperation with the federal city-state of Hamburg, which will still control it.
Amid increased geopolitical rivalry between the West and Beijing, the MSC plan might thwart a separate, controversial offer by Chinese shipping giant China Cosco Shipping to buy a minority stake in one of the HHLA’s three container terminals in Germany.
In stark contrast to the reservations expressed by German government officials about the Cosco plan, MSC's offer enjoys the full cooperation of the local state government.
“The strategic partnership between the City of Hamburg and one of the world's leading shipping companies, MSC, is a milestone in the further development of our port,” Hamburg's First Mayor Peter Tschentscher said in a joint press release with the Switzerland-based company.
Cosco, however, might take some heart from another part in the statement, in which MSC and the City of Hamburg said their partnership “should remain open to all other past and future partners of the Port of Hamburg, HHLA and its terminals”.
Elaborate deal
MSC offers €16.75 in cash for each of HHLA’s listed ‘A-Shares’.
According to shareholding figures on the HHLA website, the company has about 72.5m such shares, which would put the value of MSC’s bid at about €1.2bn ($1.28bn).
The federal city-state of Hamburg currently owns 69% of HHLA’s A-shares while the remaining 31% are scattered between institutional investors holding 21% and private retail investors holding the rest.
MSC and the Hamburg government have struck a separate binding agreement that is “setting forth the basic parameters and terms of the Takeover Offer and the parties’ mutual intentions and understandings with respect to the Company [HHLA]”.
The agreement stipulates that if MSC succeeds in bringing all the A-shares under its control, Hamburg government subsidiary HGV will in turn acquire shares in the MSC acquisition vehicle via a capital increase.
As a result of the transaction, HGV would own 50.1% of the MSC acquisition vehicle, with MSC controlling the remaining 49.9%.
The City of Hamburg retains the right to nominate the HHLA's chief executive officer and the chair of its supervisory board.
Reviewing offer
The deal is subject to approval by both regulatory authorities and the Hamburg parliament.
HHLA’s executive board said it “will review and evaluate the announced takeover Offer in the best interests of the company while safeguarding the interests of all stakeholders“.
HHLA describes itself as a “leading European port and transport logistics company”.
Its core business is container handling between its terminals in Germany, Ukraine, Estonia, Italy and their European hinterland.
HHLA container terminals in Hamburg, Odesa, Tallinn and Trieste are handling 6.4m teu in containers per year, in addition to the 1.7m teu the company handles by rail, truck and inland waterway.
HHLA furthermore offers port, consulting and other services, including in commercial real estate in Hamburg.
MSC said on Wednesday it is pledging to “substantially increase” HHLA's container volume in Hamburg, beginning in 2025 and to at least 1m TEU per year from 2031 onwards.
As part of a long-term investment plan into the company, MSC will also establish its new German headquarters in Hamburg and create “several hundred jobs“ in the city.
MSC operates 70 port terminals worldwide.
The HHLA deal “not only expands MSC's global reach, but also unlocks the trade potential for the City of Hamburg and Germany,” MSC chief executive officer Soren Toft said.
