Danish Shipping giant A.P. Møller-Mærsk A/S may not be interested to buy both the Korean operators Hyundai Merchant Marine Co. and Hanjin Shipping Co. contrary to industry speculation that it would take over either one or both of the troubled Korean cargo ship operators, according to people familiar with the matter.
Instead, the company is likely to wait for other distressed operators to seek buyout deals as they try to avoid bankruptcy, the people said.
Shares of both Korean carriers have swung widely since Hanjin filed for bankruptcy protection at the end of August on investor expectations that Maersk would come to their rescue.
Maersk is the world’s biggest container operator in terms of capacity.
The speculation of Maersk takeover activity has intensified since Maersk announced late last month that it plans to break up the group into transportation and energy units.
An executive of Maersk Line, the group’s container operator, has said it is on the lookout for acquisitions.
Hanjin’s shares rose more than 40% in the week after the executive said on Sept. 22 that acquisitions would be Maersk Line’s preferred growth option.
“Buying Hanjin or HMM are rumors invented out of thin air,” said one of the people involved in the matter. “Maersk isn’t really interested in the Korean operators.”
Hyundai Merchant Marine is seeking to acquire at least five of Hanjin’s biggest container ships out of a fleet of 37 and the Korean government has said it would back Hyundai to buy Hanjin assets.
But Hyundai is also in the midst of a creditor-led restructuring program and must get approval of its creditors to make the purchase. It also is a takeover target.
“The Korea government will fight tooth and nail to keep at least one national carrier,” said a second person with knowledge of the matter. “It’s a matter of principle to have a flag carrier moving Korean exports around the world.”
If Hanjin is able to avoid liquidation, it is expected to emerge from bankruptcy protection as a much smaller regional Asian ship operator.
Shipping industry analysts said it makes no sense for Maersk to make a move on Hyundai while it is negotiating a place in the 2M shipping alliance led by Maersk and Geneva-based Mediterranean Shipping Co. Alliance members share ships, networks and port calls which saves them millions of dollars in operating costs annually.
“If Maersk swallows up Hyundai, customer retention comes into play,” said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting. “Cargo owners want to have a choice of carriers to spread their risk,” he said.
If Hyundai becomes part of Maersk, customers will look elsewhere for a carrier to be able to shop for better rates.
When Maersk bought Royal P&O Nedloyd, another container-shipping company in 2005, it initially lost all of the latter’s trans-Pacific market share while trying to consolidate.
The container-shipping industry, which moves the world’s manufactured products, has been hurt by overcapacity, decreasing demand and a continuing cycle of price wars that have pushed freight rates to well below break-even levels over the past two years.
This has led to big losses for all carriers. Smaller ones like Hanjin and Hyundai are struggling to survive.
“The talk among top industry executives is that Maersk will wait for creditors of smaller carriers going bankrupt to knock on its door and discuss buyout deals at very low prices,” the first person said.
Mr. Larsen expects that eight carriers out of the top 20, at most, will be operating 10 years from now and collective losses will reach up to $10 billion this year.
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Source: The Wall Street Journal
