TUI rescues Hapag-Lloyd deal with increased stake, sees shares soar

The proposed $6-billion sale of container shipping group Hapag-Lloyd almost fell through after one of the buyers pulled out. Yesterday, current owner TUI salvaged the $5.8-billion sale of Hapag-Lloyd by agreeing to increase its stake in the ocean carrier and providing additional loans after the deal closes.

The parent company said it would hold 43.33 per cent of the world's fifth-largest ocean carrier, up from the 33.33 per cent it bought when it agreed to sell the line to the Hamburg-based Albert Ballin investor group for €4.45 billion in October.

Europe's biggest tourism company also will provide Hapag-Lloyd with credits of up to €1 billion ($1.3 billion) for a limited period after the sale closes to ensure the carrier has sufficient liquidity. Also, TUI will obtain the additional 10-per cent shareholding from logistics billionaire Klaus Michael Kuehne, the biggest Albert Ballin investor, who bought a stake of 25.1 per cent in Hapag-Lloyd. (See: Hapag-Lloyd sold for $6 billion to German investors; Kuehne takes 25.1 per cent)
        
Following the concessions, TUI will get €1.6 billion ($2 billion) in cash, some €400 million ($520 million) less than it originally expected. TUI said Hapag-Lloyd is still valued at €4.45 billion ($5.8 billion) including debt.

The deal was thrown into doubt after Royal Bank of Scotland said it would trigger a change of ownership clause to withdraw from a consortium of banks providing $750 million to Hapag-Lloyd to acquire 29 container ships from TUI. This triggered fears of other banks walking away from the deal.

The Albert Ballin consortium, which bid for Hapag-Lloyd to protect the carrier from an approach from Singapore's Neptune Orient Lines, reportedly thought the $5.8 billion price tag was too high at a time when the container shipping is mired in a deepening recession. (See: Singapore shipping company Neptune seeks $5 loan to buy German firm)

TUI expects to close on the deal in mid-March. TUI shares jumped 55 cents, or 13 per cent, to  €4.65 yesterday. The stock has declined 42 per cent this year and this week reached its lowest level in more than a decade and a half. Thursday's rise was a result of investors, who bet on the stock falling further, buying TUI shares to cover their positions and to limit their losses, traders said.