The planned merger between Hapag-Lloyd and Hamburg-Sud is long overdue, but the outcome of negotiations is far from certain, according to industry analyst Alphaliner.
The Hamburg-based carriers resume negotiations, which started in the summer, in the new year with the aim of reaching agreement by the end of the first quarter of 2013.
A merger creating the world’s fourth largest ocean carrier is a “natural” fit, as their liner networks are highly complementary, with Hapag-Lloyd focusing primarily on the east-west routes while Hamburg Sud operates mainly on Latin American and Australasia related trades, Alphaliner noted.
A merged carrier would have a strong presence across all main trade lanes, especially on Latin American routes, where it would have 36 percent of the capacity on the trade, according to Alphaliner.
But the last two sets of merger negotiations, in 1997 and 2004, floundered due to differences over ownership and shareholder control.
“Both carriers remain fiercely independent and will need to overcome the difficult issue of valuation as neither company is publicly listed,” Alphaliner said.
Although Hapag-Lloyd is the larger of the two carriers, Hamburg Sud is believed to be more profitable, making it difficult to come to a mutual agreement on relative valuations.
Hapag-Lloyd had net debt of 1.8 billion euros ($2.38 billion) at the end of the third quarter of 2012. Hamburg Sud, which is owned by the family-owned Oetker pizza-to-banking conglomerate, is debt free, according to German media reports.
Hapag-Lloyd attempted a merger with Singapore-based Neptune Orient Lines five years ago, but negotiations collapsed over which carrier would have a majority stake.