Hapag-Lloyd still in the merger loop, says Khne

Hapag-Lloyd’s takeover by a Hamburg consortium does not preclude future consolidation moves, the man who masterminded the acquisition said yesterday. It was very possible that Hapag-Lloyd will be involved in partnerships or mergers, Klaus-Michael Khne told journalists. &#8220But Hamburg has to stay the pivot of Hapag-Lloyd,&#8221 the company’s new strong man insisted. The Kuehne+Nagel boss also revealed that Deutsche Bahn, the country’s railway organisation that owned the huge forwarding organisation Schenker &#8211 one of Mr Khne’s main competitors &#8211 had been invited to join the consortium, but had declined the offer. On Sunday, the "Albert Ballin" consortium won the takeover battle for Germany’s largest container shipping company when the supervisory board of Tui, Hapag-Lloyd’s parent, approved the sale. Tui is going to keep one third of the stakes in Hapag-Lloyd. The only other bidder, Neptune Orient Lines of Singapore, withdrew its bid on Friday. The Tui stock rose significantly on Monday. However, the deal could face further obstacles. Dissident shareholder John Fredriksen is said to be unhappy with the Tui board’s decision to go ahead with the sale without a meeting, and may still call for a vote. Mr Fredriksen’s spokesman was not prepared to comment. &#8220We are checking the whole process,&#8221 was the only statement he made. The consortium valued Hapag-Lloyd at E4.45bn (US$6bn), including debt of E2.4bn. Tui’s proceeds from the sale will thus amount to around E2bn, Tui’s chief financial officer Rainer Feuerhake said. The group will keep a third of Hapag-Lloyd, for which it is in turn paying E700m. &#8220Despite an adverse environment, the price we have achieved for container shipping reflects its fair value even under normal market conditions,&#8221 Tui chief executive Michael Frenzel said. The State Government of the city state of Hamburg is spending E484m on the purchase of Hapag-Lloyd and will thus become an indirect major shareholder. The lion’s share will be paid by Mr Khne. The Tui supervisory board also approved the payment of a bonus dividend to its shareholders. The amount is still to be determined, the company said. The Hapag-Lloyd sale was prompted by dissident shareholders of Tui, mainly tanker owner Mr Fredriksen, who owns 15% of Tui. The size of the special dividend is likely to have a major influence on Mr Fredriksen’s position on the deal. Mr Fredriksen remains sceptical on the question of whether a sale would, under the current market conditions, yield sufficient cash to allow a sizeable special dividend. Tui has chosen a complicated deal to prevent Mr Fredriksen from getting in the way. It is selling Hapag-Lloyd to newly founded subsidiary of the Albert Ballin consortium. It will then acquire one third of the new company for E700m. With this move, Tui is trying to avoid an extraordinary general meeting and possible opposition by Mr Fredriksen at that meeting. If Tui had sold Hapag-Lloyd completely, a general meeting would have become necessary for approval, according to company law specialists. Tui has promised to keep its Hapag-Lloyd stake until 2012 at least, but could leave earlier if both owners agree. Michael Behrendt will stay chief executive of Hapag-Lloyd. However, he stepped down yesterday from the management board of Tui, of which he has also been member. Mr Behrendt said that there will be no job cuts at Hapag-Lloyd. Hapag-Lloyd staff fiercely opposed sale to NOL, fearing massive layoffs, and NOL had refused to give job guarantees.

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