Shipping giant agrees takeover

Container shipping group P&O Nedlloyd looked set to be taken over by larger rival Maersk after the pair unveiled a deal worth €2.3bn.

London-based P&O Nedlloyd – the world’s fourth largest provider of container shipping services by fleet capacity – will become part of industry heavyweight Maersk if the terms of a deal can be settled in the coming weeks.

The proposed takeover has the backing of the P&O Nedlloyd board and is expected to result in the loss of 1,500 full-time positions, equivalent to around 5% of the combined workforce.

P&O Nedlloyd, which was created following the merger of P&O Containers and Nedlloyd Lines in December 1996, runs a fleet of 156 ships calling at 217 ports in 99 countries. Its turnover last year was $6.7bn (€5.21bn).

The company said it had “no hesitation” in recommending the proposal, which it said made sense in a highly fragmented industry such as container shipping.

Chairman Andrew Land said of the two businesses: “Their combined scale and know-how will create the world’s leading container shipping line and logistics provider.”

The deal will cement Maersk’s market leading position, although analysts believe there are unlikely to be serious competition concerns.

Maersk – the trading name for AP Moeller Maersk – is likely to be interested in buying P&O Nedlloyd to expand and cut costs before rising freight rates start to decline again as shipping companies expand their fleets.

It said the deal would enable it to make more effective use of the merged network of routes and services. The company currently has a fleet of more than 300 container vessels and one million containers.

Details of the takeover emerged on the day that P&O Nedlloyd – 25% owned by ferries and ports group P&O – posted first quarter figures showing a 14% rise in average freight rates during the quietest trading period of the year.

Operating profits lifted 252% to €74m while chief executive Philip Green said the trading outlook continued to be positive.