Analysts project OOCL takeover, lines dismiss the rumors

Original Post Source

Dive Brief:

  • A comment in Alphaliner’s weekly report projecting Orient Overseas Container Lines (OOCL) would be the next line to be taken over sparked a trading frenzy in Hong Kong, sending the parent company’s stock to its highest level since October 2015, Splash24/7 reported Wednesday.
  • Drewry Shipping Consultants predicted the shipping line would be purchased by CMA CGM, rather than COSCO Shipping or Evergreen Marine, as originally suggested by Alphaliner.
  • The Journal of Commerce notes, however, the takeover rumors have been floating for years, although CMA CGM’s growth-by-acquisition strategy, widespread consolidation and the fact OOCL may soon report its first full year net loss since 2009, lends supports the rumors.

Dive Insight:

Hundreds of carriers may crowd the container shipping industry, but the world of the elite lines is quite small. While publicly traded companies are subject to the scrutiny of investors, they may also benefit from a public rumor and analyst speculation.

The story then is not that the stocks jumped after analyst comments or that CMA CGM, COSCO Shipping or Evergreen Marine may be interested, but of the stakeholders’ reactions to the news. If analysts predict, investors trade and news outlets report on these rumors, it is first because the state of the shipping industry has given credence to any takeover bid or rumor of a deal.

After all, Maersk Line’s interest in purchasing Hamburg Sud was reported just days before the deal announcement, as was Hyundai Merchant Marine’s failure to enter as a full partner into the 2M Alliance. Further, assets are transferred all the time, and as one Financial Times graphic shows,Chinese companies are now at the center of many shipping and terminal operations. The maritime industry, and the supply chain that operates it, is but a network of deals at the end of the day.

Industry analysts including Alphaliner, Drewry and IHS Markit are close to many sources, and discussions of such executive moves occur over time, albeit among a relatively small group of people. The top 10 shipping lines alone operate 40% of the world’s container capacity, after all, and the industry will only get smaller as mega-lines and alliances continue to form.  

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