Dive Brief:
- China's state-owned COSCO Group is allegedly about to bid on Hong Kong-based Orient Overseas Container Line, the Wall Street Journal reported Wednesday.
- Rumors of a bid as high as $4 billion are circulating, though the two lines are already part of The Ocean Alliance, which also includes Evergreen Line and CMA CGM. Operations for the alliance will commence in April, just three months hence.
- Unsurprisingly, the potential sale has boosted shares of Orient Overseas’s parent company Orient Overseas International Ltd., nearly 30% within the last 30 days.
Dive Insight:
If fourth-ranked by fleet capacity COSCO were to take over OOCL, the newly merged company would surpass The Ocean Alliance-partner CMA CGM as the 3rd largest shipping line in the world. Yet, COSCO only recently merged with China Shipping, leading some analysts to doubt whether another major acquisition would follow so promptly.
However, rumors abound in the fast-consolidating world of shipping. Although IHS Fairplay reports OOCL has denied any involvement in takeover talks and warned against trading on speculation, the rumors have spread like wildfire.
Yet, who's to blame when, as has happened so often in the past, large mergers and announcement are preceded but by an oft-denied set of rumors. So often lately the rumors do turn out to be true, as in the case of Hamburg Sud (purchased by Maersk) and 2M's rejection of HMM as a full partner. Then again, while it may in fact be true that Cosco will attempt to purchase OOCL, it's equally likely that no sale at all will occur, or another buyer will emerge at the last minute.
Regardless, the other lines' silence on the issue and analyst speculation will likely continue to encourage the stock market traders.
