Report: Long Beach Terminal Hindering COSCO’s Takeover of OOIL
China’s COSCO Shipping Holdings has reportedly proposed to divest the Long Beach Container Terminal (LBCT) in order to obtain US approval for the takeover of Orient Overseas International Limited (OOIL).
According to the Wall Street Journal, the option was unveiled after the Committee on Foreign Investment in the United States (CFIUS) raised concerns over COSCO taking control of the Long Beach terminal.
The parties held a meeting last week, during which the Chinese major said it could either divest or carve out the terminal in order to get CFIUS’ go-ahead for the USD 6.3 billion takeover deal.
“The transaction process is ongoing and we remain confident. We will update the market when appropriate,” OOIL representative said.
OOIL’s shipping arm OOCL holds a 40-year concession to operate the facility at the Port of Long Beach, which is one of the biggest gateways for imports into the US.
COSCO earlier said that the takeover is expected to be completed by June 30, 2018. If the company fails to complete the deal by the deadline, OOIL will receive a break fee of USD 253 million. The fee would be waived if the transaction fails to meet the requirements of CFIUS.
In mid-2017, COSCO Shipping Holdings and Shanghai International Port Group (SIPG) made the offer to buy all issued shares of OOIL. Once the transaction is completed, COSCO would hold 90.1% of OOIL, becoming the world’s third-largest container carrier.
COSCO would have a combined fleet of 400 vessels, with capacity exceeding 2.9 million TEUs including orderbook, Drewry said last year.
World Maritime News Staff