Last Wednesday (13SEP23), the Hamburg city government announced an offer made by shipping line, MSC, to acquire 49.9% in terminal operator and logistics specialist, HHLA (Hamburg Harbor + Logistics Company). However, the plan met with massive criticism. Whether it will be implemented as intended now seems increasingly doubtful.
In the meantime, Kuehne+Nagel Holding and HHLA competitor, Eurogate, have announced counterbids. Should they succeed, this would shake up the city’s political landscape. Hamburg is governed by a coalition of Social Democrats and Greens, which strongly favor the MSC advance. The city is HHLA’s largest shareholder (69%), with private investors accounting for around 10%, and institutional investors, 21%. There are no reactions from them yet to the planned MSC coup. A bidding contest would drive up the price of their shares, so should be favored by them.
The airport as a role model
And these are the specs: The Geneva, Switzerland-headquartered shipping company offered HHLA shareholders and capital investors to pay them EUR 16.75 per share. On Saturday (16SEP23), the share stood at 17.12 EUR and is thus valued higher by investors compared to the MSC offer. The box carrier also intends to buy the 19% package held by the city government.
Should the deal be concluded, Hamburg’s Senate would benefit twice: the city’s coffers would be filled and – even more important – the federal State would retain a 50.1% majority stake and thus continue to call the shots at HHLA.
The MSC construct is formally a copy of the airport policy, where Hamburg also holds 51%, having sold 49% to investor AviAlliance, years ago.
More TEU, more jobs
A key part of the declared agreement with MSC, is the shipping line’s assurance to significantly increase the tonnage handled in Hamburg from 2025 onwards. By 2031, it would handle one million additional standard containers (TEU) per year. MSC also intends to relocate its German headquarters to Hamburg and create an additional 700 jobs, CEO, Sören Toft promised at a joint press conference, attended by the city’s leading policymakers.
Bidding contest looms
However, it is questionable whether the controversial project will be implemented as announced. According to Tom Eckelmann, Chairman of the Eurogate Group, his company is preparing a counteroffer. Kuehne+Nagel Holding AG is following similar tracks, as company patron, Klaus-Michael Kuehne hinted. However, the latter is seeking to acquire a majority stake in HHLA, which the city has categorically rejected in confidential talks. Sitting in the driver’s seat is better than being a co-pilot, is the credo of the ruling coalition, consisting of Social Democrats and Greens.
The situation is even more complicated by the fact that Kuehne+Nagel also holds 30% in Hamburg-based shipping line, Hapag-Lloyd. However, in an interview with local paper, Hamburger Abendblatt, its CEO, Rolf Habben Jansen declined any plans of a Kuehne+Nagel – Hapag-Lloyd joint counteroffer to torpedo the MSC investment.
Hapag-Lloyd creates new business unit to manage terminals
Instead, the shipping line announced the founding of a new subsidiary: Hapag-Lloyd Terminal Holding. Its aim is to pool the group’s infrastructure assets. These are mainly terminals in Morocco, Italy, India, and Latin America, among others, managed by Hapag-Lloyd. Head of the new subsidiary will be Indian national, Dheeraj Bhatia, who has already been with the shipping line in various functions since 2014.
The new holding will be based in Rotterdam. This issue would probably have been decided differently, Hapag-Lloyd CEO Habben Jansen hinted in the interview with Hamburger Abendblatt. His plan was to create a strong maritime cluster together with HHLA. This would have secured the handling of four million containers -
twice as much as Hapag-Lloyd handles in Hamburg today. There is also a name for the envisaged subsidiary: Hamburg Ports. But whether it will ever be realized is the one-million-euro question.
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