In a bid to deal with a saturated market, German carrier Hapag Lloyd has agreed on a deal to merge with United Arab Shipping Company (UASC), which would create a total estimated value of up to US$8.9 billion for both companies, according to Reuters.
The deal will see Hapag-Lloyd take all the shares in UASC, following the approval of the deal by its supervisory board.
PTI previously reported that UASC shareholders had backed a potential deal at an Extraordinary General Meeting.
The idea to merge was first proposed for both lines to be more competitive in a saturated market caused by weak demand, low freight rates and overcapacity.
Hapag-Lloyd has since merged with a number of Asian carriers to form THE Alliance, which aims to take on 2M and the OCEAN Alliance as a competitive shipping alliance.
The most recent development in terms of shipping alliances is with Maersk and MSC’s 2M alliance, which could see Hyundai Merchant Marine (HMM) joining up with both carriers.
HMM is looking to join 2M in order to gain some stability in a market that remains volatile, which could also be impacted further by Britain’s recent decision to leave the European Union.