Cosco takeover of OOCL cleared for completion

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China’s regulatory approval of Cosco Shipping Holdings Co. Ltd.’s $6.3 billion takeover of Orient Overseas (International) Ltd. 0316 4.16% brings the latest step in shipping consolidation a step closer to completion.

Beijing’s antimonopoly bureau said in a filing that “all the Pre-Conditions to the Offer have been fulfilled.” The thumbs-up is important because the buyout includes the OOIL-run Long Beach Container Terminal, a sprawling cargo-handling site at California’s Port of Long Beach and one of the biggest U.S. gateways.

The approval suggests Chinese officials are confident the deal will pass a U.S. security review now that Cosco submitted a plan to sell the cargo terminal.

The sale, one of the biggest in a series of deals in a consolidating container shipping industry, raised security concerns in Washington and is being reviewed by the Committee on Foreign Investment in the U.S., a federal panel that vets foreign purchases of American companies on national security grounds.

People involved in the matter said Cosco offered to put the LBCT site into a U.S.-run trust, before selling it within a year.

“The Chinese regulatory bureau would not have given its approval if it wasn’t confident that CFIUS will play along,” one person said. “The deal is moving smoothly towards completion by around mid-July.”

Cosco senior executives had a series of talks with CFIUS reviewers in Washington over the past few months and one said “we’ve done what the Americans asked.”

The Long Beach terminal is one of the few in the U.S. that is almost fully automated and can handle some of the largest container vessels. The terminal is expanding to facilitate ships carrying more than 20,000 boxes each.

Global port operators estimate the terminal is worth up to $1.5 billion.

Source: Wall Street Journal

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