COSCO Proposes Divestment From Long Beach Terminal
COSCO Shipping Holdings, a Chinese ocean carrier, is reportedly proposing to divest its potential interest the Long Beach Container Terminal (LBCT) in order to obtain approval from United States authorities for the takeover of Orient Overseas International Lines (OOIL).
According to the Wall Street Journal, the option was floated to the Committee on Foreign Investment in the United States, after CFIUS raised concerns over COSCO taking control of the Long Beach terminal.
COSCO met with CFIUS in April, during which meeting when the Chinese carrier said it could either divest its interest in the terminal or carve it out in its bid to get CFIUS’ approval for the $6.3 billion acquisition.
“The transaction process is ongoing and we remain confident. We will update the market when appropriate,” an OOIL representative said.
OOIL’s shipping arm OOCL holds a 40-year concession to operate the facility at the Port of Long Beach, which is one of the biggest gateways for imports into the US.
COSCO earlier said that the takeover is expected to be completed by June 30, 2018. If the company fails to complete the deal by that deadline, OOIL will receive a break fee of $253 million. That fee would be waived if the transaction fails to pass muster with CFIUS.
COSCO Shipping Holdings and Shanghai International Port Group (SIPG) made the offer to buy all shares of OOIL in mid-2017. If and when the transaction is completed, COSCO would hold 90.1 percent of OOIL, making it the world’s third-largest container carrier. The combined carrier would have a fleet of 400 vessels, with capacity of over 2.9 million TEUs, according to Drewry, including ships on order.