Purchase price offers OOCL shareholders some comfort

THE family of former Hong Kong chief executive Tung Chee-hwa is giving up its Orient Overseas Container Line (OOCL), but the price the mainland buyer is paying offers some comfort. Cosco Shipping Holdings Co agreed to pay US$6.3 billion for OOCL, the Hong Kong container-shipping group that China reportedly helped bail out from the verge of bankruptcy in the 1980s.

Swallowing Hong Kong's largest box mover catapults the state-owned Chinese company to the world's third-biggest shipping line, and the largest serving the Asia-North America route. Perhaps more importantly, it tightens China's control of the ports and shipping lines that turned Hong Kong into a global trade hub.

The deal itself wasn't a shock. The shipping industry has been reckoning with depressed demand and low rates for years, leading to billions of dollars in bankruptcies and consolidation in a global container fleet now controlled by just three main groups. OOCL, the ninth-biggest line with a market share of less than 3 per cent market, wouldn't have been able to keep sailing solo.