The proposed $1 billion deal between China International Marine Containers Ltd. (CIMC) and Maersk Container Industry (MCI) has fallen through after US authorities blew the whistle on the deal.
CIMC was due to take over MCI’s entire organisation and assets which include the reefer factory in Qingdao, China, as well as its R&D and test engineering facilities in Tinglev, Denmark.
Now, the two firms have announced that the deal will be scrapped because of “significant regulatory challenges” preventing the transaction, Maersk wrote.
Following an investigation, the US Department of Justice’s Antitrust Division argued the proposed transaction would have combined two of the world’s four suppliers of insulated container boxes and refrigerated shipping containers.
It would also have consolidated control of over 90 per cent of insulated container box and refrigerated shipping container production worldwide in Chinese state-owned or state-controlled entities.
“American consumers depend on the global cold supply chain for many of our everyday essentials,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division.
“CIMC’s acquisition of MCI threatened to harm this critical aspect of our economy leading to higher prices, lower quality, and less resiliency in global supply chains.
“It would have cemented CIMC’s dominant position in an already consolidated industry and eliminated MCI as an innovative, independent competitor.
“The deal also would have substantially increased the risk of coordination among the remaining suppliers in the marketplace, most of whom would have been aligned through common ownership and related alliances,” Kanter added.
“It is unfortunate that the transaction will not happen despite efforts of all parties involved,” commented Patrick Jany, CFO at A.P. Moller – Maersk.
“Throughout the process MCI has performed very well thanks to the dedication of all its employees. Maersk will continue to be a proud owner of MCI for the foreseeable future, and we will now assess the best structural set-up for MCI to ensure the long-term development of the business.”
Founded by Maersk in 1991, MCI has been a part of the Maersk company for more than 30 years.
Over the years, it has transformed into a business focusing entirely on manufacturing refrigerated containers.
Today, MCI employs 2,300 people in China and Denmark.