Quick Take: COSCO Gets U.S. Nod for Hong Kong Shipping Line Takeover
State-owned shipping giant COSCO Shipping Holdings Co. Ltd. said it has cleared a major hurdle in its planned $6.3 billion takeover of Hong Kong-based Orient Overseas (International) Ltd. by gaining approval from a U.S. national security committee.
COSCO announced on Sunday it passed the review of the Committee on Foreign Investment in the United States (CFIUS), allaying concerns that trade tensions between the U.S. and China would upend the deal. Last week the U.S. and China each imposed $34 billion in tariffs on the other as a long-threatened trade war erupted.
Earlier reports had suggested that a potential sticking point to CFIUS approval was that the takeover will give COSCO control over Orient Overseas’ concession at the Long Beach Container Terminal in California, which ranks among the most advanced container terminals in the U.S.
However, COSCO’s announcement in April that it would divest its stake in the Long Beach terminal seems to have allayed potential security concerns. The deal now has gained the approval of Chinese, EU and U.S. regulators.
COSCO’s purchase of Orient Overseas, which is controlled by the family of Hong Kong’s first post-handover chief executive, Tung Chee-Hwa, will increase COSCO’s shipping fleet to around 400 vessels, making it the world’s third-largest, behind Danish conglomerate Maersk Line and Switzerland-based Mediterranean Shipping Co.
The global containing shipping industry is starting to rally after the lengthy downturn that followed the 2008 financial crisis, according to industry analysts. The COSCO deal follows a trend of mergers and acquisitions, with the top six shipping lines now having a 63% share, following the bankruptcy of South Korean giant Hanjin Shipping Co. Ltd. last year.
Contact reporter Ke Dawei (email@example.com)
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