Maersk Line is expanding its presence in the global freight sector.
The worldwide container shipping company purchased German-based shipping line Hamburg Süd for $4 billion on Thursday, The Wall Street Journal reported. Affiliated sources said the deal is projected to be completed by the end of 2017.
“With the addition of Hamburg Süd we will become the leading player in trades in and out of Latin America,” said Maersk Chief Executive, Soren Skou, in an interview.
According to Alphaliner data, the takeover would increase Maersk Line’s market share of international ocean freight to 18.6%, making it one of the largest shipping companies worldwide. Skou also said the acquisition will grow APM Terminal business and Maersk’s port operations division.
Last week, Maersk expressed interest in buying Hamburg Süd, which is owned by shipping German conglomerate Oetker Group. Before the acquisition, Oetker Group initially requested Maersk pay $5 billion.
“Giving up our engagement in shipping after an 80-year-long ownership in Hamburg Süd was not an easy decision for my family,” August Oetker said. “We are very confident, though, to have chosen the best of all possible partners.”
As the seventh largest shipping operator, Hamburg Süd manages 130 container vessels with a capacity of over 600,000 containers. Although the company reported sales of $6.7 billion last year, sources said the Oetker family decided to exit from the shipping industry, due to plunging shipping rates and the inability to facilitate consolidation among other key freight members.
The acquisition follows the recent financial troubles of the shipping industry. Many major freight companies, including Maersk, have suffered declining profits due to difficult market conditions. In May, Maerk’s profits fell 86 percent to $224 million and in August, the company ended service at 10 Chinese ports to consolidate costs. On Oct. 26, Maersk reported that group profits fell from $778 million to $438 million.