DIFC to host UASC after merger

The multi-billion merger between United Arab Shipping Company (UASC) and German shipping line Hapag-Lloyd has been completed to create one of the world's largest shipping lines.

The multi-billion merger between United Arab Shipping Company (UASC) and German shipping line Hapag-Lloyd has been completed to create one of the world's largest shipping lines.

Following the merger deal, estimated between $7.6 billion and $8.7 billion, UASC has selected Dubai International Financial Centre, a leading financial hub in the Middle East, as domicile.

Welcoming Hapag-Lloyd to its business community, DIFC said the transaction is one of the largest ever mergers involving a DIFC company or any company based in the Gulf region.

With 230 vessels and a combined turnover of approximately $12 billion, the combined entity will be the fifth-largest liner shipping company in the world. UASC was established in 1976 by six shareholding states as a supranational legal entity formed pursuant to a state treaty. To make the merger possible, UASC was first re-domiciled to the DIFC. UASC has also utilised a number of innovative SPC and ISPV structures that were made available in the Centre, DIFC said in a statement.

"We are pleased to welcome one of the most established and respected global shipping businesses to DIFC's business community, particularly at such an exciting time for the company as it announces the completion of its merger with Hapag-Lloyd. The move underlines how DIFC is quickly developing as a domicile of choice thanks to its experience in supporting companies with innovative structured finance transactions," said Arif Amiri, chief executive officer of DIFC Authority.

"DIFC offers a geographically attractive platform, underpinned by an internationally benchmarked regulatory and legal system, enabling businesses and investors to tap into key emerging markets across the region and thereby supporting the achievement of their respective business objectives," said Amiri.

Jorn Hinge, who led UASC as chief executive officer until the closing, said choosing DIFC as the jurisdiction for UASC in preparation for the merger is testament to UASC's confidence in the Centre as an important enabler as the combined entity moves forward in its regional, and global, growth strategy.  

"The DIFC is an attractive choice in a number of ways, offering a range of benefits, providing access to 100 per cent foreign ownership, zero tax, DIFC law and DIFC infrastructure," Hinge said.

DIFC continues to play a pivotal role in meeting the growing financial services needs of the region and serves as the regional financial hub of choice for ambitious, international businesses.

"This is an important strategic milestone and a big step forward for Hapag-Lloyd," said Rolf Habben Jansen, chief executive officer of Hapag-Lloyd.
"We now not only have a very strong market position in Latin America and the Atlantic, but also in the Middle East, where we will become one of the leading carriers. Our priority now is a smooth and fast integration of UASC and Hapag-Lloyd."

At the centre of the integration is the combination of 118 Hapag-Lloyd services with the 45 services making up UASC's network. This process will take until the end of the third quarter, once the new employees from UASC have been trained to use the Hapag-Lloyd systems. After that UASC's present transport volume will be handled on Hapag-Lloyd's IT platform. The combined entity will thereby carry an estimated annual transport volume in excess of 10 million TEU.

UASC's 58 vessels will be integrated into the fleet of Hapag-Lloyd. The combined fleet will then include a total of 230 vessels and be one of the youngest in the industry, with an average ship age of only 7.2 years.  

- issacjohn@khaleejtimes.com

Issac John

issacjohn@khaleejtimes.com