€1.7bn purchase for Hapag-Lloyd

TUI AG, owner of the Hapag-Lloyd shipping line, has agreed to pay €1.7 billion in cash for CP Ships, a British container company, in an effort to increase capacity and reduce costs.

TUI offered $21.50 a share for the Gatwick company, according to a statement released over the weekend.

This was 10% above CP Ships’ closing price on Friday.

TUI will assume €261m in debt.

The purchase, the second multi-billion-dollar takeover among shipping companies this year, will make Hapag-Lloyd the world’s fifth-largest container line. Copenhagen’s AP Moeller-Maersk bought Royal P&O Nedlloyd NV for €2.3bn this month.