Maersk, Hamburg Süd deal is inches away from close

Dive Brief:

China's Ministry of Commerce on Tuesday approved Maersk Line's acquisition Hamburg Süd, with several conditions, leaving only Colombia and South Korea to approve the deal before it closes, according to JOC.com.
The regulator found the deal would restrict competition in both the common and refrigerated liner markets in when trading on the far East Asia to South America east and west coast lanes, according to a press release.
Maersk Line was asked to refrain for five years from entering new vessel sharing agreements with its main competitors, withdraw Hamburg Süd from a VSA from the Far East Asia to East Coast of South America and not extend Hamburg Süd's membership in the Far East Asia to West Coast of South America, JOC.com reports.

Dive Insight:

Any shipping industry merger must inevitably go through a series of regulatory approvals — 21 in this deal's case — to ensure no country's market is adversely affected by the deal.

But some regulatory approvals are more significant than others, and industry analysts often watch how the U.S., European Union and China react to determine its success. Now, all three have approved the merger, leaving little doubt as to the deal's success and further consolidating the industry.

"In the best case, however, we will close at the end of this month, at the end of November," said Maersk CEO Soren Skou during a recent earnings call.

Colombia and South Korea may still present additional conditions, but Maersk has proven its willingness to acquiesce. The carrier already sold Mercosul Line to CMA CGM, to appease the European Union's concerns, and should have no issues accepting China's demands. And Brazil, whose market is most likely to be affected, approved the deal without conditions.

"Hamburg Süd is progressing as planned and the synergy case that we have announced earlier is intact with synergies anticipated to be in the range of $350 million to $400 million synergies in 2019," A.P. Moller - Maersk Chief Finance, Strategy and Transformation Officer Jakob Stausholm said during the earnings call.

Already, he added, Maersk is seeing the benefits of increased slot sharing agreements with Hamburg Süd, as well as new alliance partner Hyundai Merchant Marine.