MSC Mediterranean Shipping Company has reached another key step in its proposed investment in HHLA (Hamburger Hafen und Logistik Aktiengesellschaft) which operates the port of Hamburg. The first phase of the tender offer process was completed on November 20 and is now moving into a mandatory second phase which runs until December 7 with the company reporting good progress to complete the proposed acquisition.
Under the terms announced in October, MSC is seeking to acquire all the A shares of HHLA while the City of Hamburg would continue to own the S shares and retain majority ownership of the company. Together they have agreed to a plan calling for significant investments in the port’s operations and an expansion of MSC’s operations in Hamburg. The Supervisory Board of HHLA recommended the acquisition saying it would strengthen Hamburg’s competitive position both in ocean shipping and inland logistics.
"The end of the first acceptance period marks an interim step for our offer to the HHLA shareholders. We are very happy with the joint venture partners City of Hamburg and MSC already together have more than 86 percent of HHLA's share capital,” said Nils Kahn, Managing Director of MSC Germany. “We have made very good progress in the last few weeks in order to achieve our joint growth plans with HHLA and the city to implement the act."
The first phase of the offering was launched in late October and ran for approximately a month. They are reporting that more than 4.4 million A shares were tendered during this phase. That represents approximately 16 percent of the share capital of HHLA. Combined with the shares owned by the City and MSC, the joint venture partners now control just over 86 percent of the total share capital.
Under German security law, there is now a mandatory two-week second phase where shareholders can still accept the terms offered by MSC. The deal also still requires regulatory approval before closing, which is expected in the second quarter of 2024.
The current ownership level is a critical mark in the transaction as MSC and the City now control a sufficient portion of the share capital after surpassing 80 percent to prevent any blocking action by shareholders. However, they are short of the next critical mark. once they reach 90 percent ownership, MSC will be able to trigger a mandatory conversion for the remaining A shares.
After the closing, it is anticipated that the City will hold 50.1 percent of the share capital of HHLA. MSC if it is successful at forcing out the other shareholders would reach a maximum of 49.9 percent ownership, but the deal is not contingent on reaching a minimum.
Subject to the approval of the Hamburg Parliament, the City of Hamburg and MSC have agreed to provide HHLA with €450 million ($482 million) in additional equity capital to be used for investments in business operations over the next few years. The City of Hamburg and MSC will also support the corresponding investment plans which total at least €775 million ($830 million) between 2025 and 2028.
A working agreement reached between MSC and the City of Hamburg also states the HHLA will retain decision-making authority over its investment planning. MSC has committed to no operational layoffs for at least five years while saying it will establish an office in Hamburg. The carrier also committed to grow its volume in Hamburg to reach 1 million TEU from 2031.