The parent of Hapag Lloyd today scrapped plans for the carrier's initial public offering, saying it can't get "fair value" for Germany's biggest container shipping line.
Hapag Lloyd will remain a subsidiary of travel agent TUI and there are no plans to sell a stake to a strategic investor, the Hanover-based company said.
TUI had intended to float between 30 percent and 49 percent of Hapag Lloyd, valued by analysts at around 2.5 billion euros ($3 billion), on the Frankfurt stock exchange and use the proceeds to pay down debt.
But the company said today "the financing requirements of the group are now structured on a long-term basis, and the envisaged further reduction in debt can be successfully achieved without an IPO."
Analysts say the carrier is now only valued at $1.8 billion, reflecting investors' concern about the medium term outlook for container shipping, and TUI likely will issue shares to raise the funds originally targeted by the offering.
Hapag Lloyd is TUI's most profitable division. Earnings rose 62.5 percent in the first half from the year-earlier period to $125 million, driven by higher liner freight rates and an 18.8 increase in box traffic to 1.17 million TEUs.
-- Bruce Barnard in London