Post by on 2017-09-08
COSCO Shipping Holdings expects spectacular returns - US$300 million in savings - from its acquisition of Hong Kong's Orient Overseas Container Line (OOCL), even if its full realisation is 20 years away, reports Tokyo's Nikkei Asian Review.
The US$6.3 billion takeover announced in July also stands to help Cosco become the world's third-largest container shipping line with a 2.9 million TEU capacity, just behind Maersk and the Mediterranean Shipping Co (MSC).
"The synergy effect will not be shown in one year, but in the next few years and up to 10 or 20 years," Cosco vice chairman Huang Xiaowen told reporters at an earnings briefing.
Mr Huang denied that the deal was expensive, citing operational efficiency and the brand value of OOCL as a 50-year-old company founded by the Tung family. "All these can't be measured by price," he said, adding that the deal would help Cosco realise its target of cutting annual unit costs per container by three to five per cent.
The sale still needs regulatory approval and it applies against a background of concerns over the transfer of OOCL's port assets at Taiwan's Kaoshiung and Long Beach in California to Cosco.
If the deal were to be rejected by the US, Mr Huang said the company would "respect" OOIL's decision and adopt the "best solution" after comparing different proposals.