Dive Brief:
- A.P. Moller - Maersk announced Monday it would sell its oil division (Maersk Oil) to French conglomerate Total for $7.5 billion in a combined debt and share transaction.
- The sale is part of the Danish conglomerate's plan to focus on transportation and logistics by separating out its oil-related segments, which have led drilling in the Danish North Sea for half a century.
- The Danish group must still determine the future of Maersk Drilling, Maersk Supply Service and Maersk Tankers, which the company says will be clarified before the end of 2018.
Dive Insight:
A.P. Moller - Maersk's decision to spin off its oil-related businesses follows years of declining revenues due to low freight rates and depressed oil prices.
As a result, in September 2016 the conglomerate announced it would bet on its transportation business for growth, appointing a new chairman and renewing its vision in the interim. Since that time, the Maersk Group has publicized its intentions to become a full supply chain services provider, investing in its freight forwarding, digitization and transparency capabilities.
The group's $7.5 billion sale of its oil assets is a step in this new direction, which has the added benefit of providing a cash infusion that could be used for later purchases. During the group's annual meeting, Maersk CEO Soren Skou said he sees acquisitions as the company's main avenue for growth. Once the group completes its reorganization and the sale of its remaining oil businesses, it is likely that the company will target terminals, freight forwarders, or other technology providers to capture market share in its new area of focus.
In the meantime, the company is looking forward to a profitable 2017 after two consecutive years of losses, due to an improved freight market. However, 2017 appears to be largely a year of transition ahead of major shifts in the group's business model in 2018.
