P&O sails away from container shipping

Ports and ferries group P&O ended its interest in container shipping today when it raised £378m (€569.8m) from the sale of its stake in Royal P&O Nedlloyd.

The 25% holding is to be snapped up by AP Moeller-Maersk as part of its £1.5bn (€2.3bn) takeover of the world’s fourth largest provider of container shipping.

P&O’s interest in the sector dates back to the 1960s when it was one of the founding members of Overseas Containers Limited, a business that later became P&O Containers in 1985 before merging with Nedlloyd Lines in 1996.

It now runs a fleet of 156 ships calling at 217 ports and generating turnover last year of $6.7bn (€5.6bn).

P&O Nedlloyd said last month it had “no hesitation” in recommending the proposal from Maersk to shareholders, adding that such a deal made sense in a highly fragmented industry such as container shipping.

In May, Maersk made a conditional offer for P&O Nedlloyd at €57 a share, although P&O today opted for the certainty of selling direct to the bidder, at a price of €56.25 a share.

The Maersk offer has still to gain the approval of regulatory bodies in Europe and the United States.

P&O said today it planned to use the proceeds to pay down debt and possibly also reduce the deficit on the company’s main UK pension scheme.

Maersk said last month that 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.