SANTIAGO Germany's Hapag-Lloyd HPLG.UL and Chilean shipper Vapores VAP.SN have agreed to a business tie-up that would create the world's fourth largest container-shipping company, the companies said on Wednesday.
Vapores will take a 30 percent stake in Hapag-Lloyd, making it the single largest shareholder in the German company, under terms of the non-binding memorandum of understanding.
It said it will sign a pact with Hapag-Lloyd key shareholders: the city of Hamburg and businessman Klaus-Michael Kuehne. Together they will hold 75.5 percent of the firm.
The deal contemplates two capital hikes totaling 740 million euros ($1.00 billion) within 12 months of the business tie-up, 370 million of which would be part of Hapag-Lloyd's debut on the stock market, the company said.
The statement did not specify which stock market the shares would float on.
German travel and tourism company TUI AG (TUIGn.DE), which holds 22 percent of Hapag-Lloyd, has said it wants to exit its stake in Hapag-Lloyd so it can focus solely on tourism. But its Chief Financial Officer Horst Baier was quoted in German paper Frankfurter Allgemeine Sonntagszeitung on Sunday as saying the company is interested in an IPO of their stake, despite the ongoing talks.
Vapores said it plans to subscribe to 259 million euros in the first capital increase, boosting its stake in Hapag-Lloyd to around 34 percent.
Expected synergies from the deal would be around $300 million annually, they said.
The new company would have combined annual sales of nearly $12 billion and transportation capacity of almost 1 million 20-foot equivalent units (TEUs).
Vapores, majority-owned by the billionaire Luksic family, Chile's richest, has been seeking to battle steep losses caused by low freight rates, high fuel prices and expensive leases.
Earlier this year, the owners of unlisted Hapag-Lloyd called off a planned merger with rival German shipper Hamburg-Sued because terms could not be agreed.
At the time, major Hapag-Lloyd shareholder Klaus-Michael Kuehne had said the combination between the German peers was attractive, arguing it made sense to bolt Hapag-Lloyd's Asia focus to Hamburg-Sued's strength on South American routes.
(Reporting by Santiago newsroom; Additional reporting by Victoria Bryan in Frankfurt; Writing by Anthony Esposito; Editing by Andre Grenon and David Gregorio)