Danish shipping giant plans $3bn bid for P&O Nedlloyd

The world's biggest container shipping company, AP Moeller Maersk, is set to swallow up its smaller rival, the Anglo-Dutch P&O Nedlloyd, in a deal valuing the business at about $3bn (£1.6bn).

The world's biggest container shipping company, AP Moeller Maersk, is set to swallow up its smaller rival, the Anglo-Dutch P&O Nedlloyd, in a deal valuing the business at about $3bn (£1.6bn).

The privately controlled Danish group confirmed yesterday it is in discussions about a purchase of P&O Nedlloyd, sending shares in the company soaring 21 per cent on the Amsterdam stock exchange, valuing it at €2bn (£1.4bn).

An announcement of a deal could come as early as this week with a formal takeover offer tabled in the next two to three weeks.

AP Moeller Maersk, which is controlled by the 91-year-old billionaire Maersk McKinney Moeller, has about 12 per cent of the world container market. Adding P&O Nedlloyd to its stable would raise that to about 17 per cent.

Any offer from the Danes would be in cash and is likely to be at a premium of at least 10 per cent to last night's closing P&O Nedlloyd share price of €50.45.

The container shipping industry has boomed over the past two years as growth in world trade, driven by the phenomenal expansion of the Chinese economy, has kept demand comfortably ahead of capacity.

However, some analysts foresee shipping rates being driven lower next year by a surplus of capacity and have interpreted AP Moeller Maersk's interest in P&O Nedlloyd as a defensive one enabling it to slash costs ahead of any industry downturn.

Philip Green, the chief executive of P&O Nedlloyd, has made no secret of his belief that the container shipping industry is ripe for consolidation and has been looking for takeover opportunities. However, the approach from the Danes, which was made in the past two or three weeks, is understood to have been unsolicited. Mr Green was in Rotterdam yesterday and unavailable for comment.

AP Moeller Maersk is valued at about $40bn and is quoted on the Copenhagen exchange. It owns airline, supermarket and North Sea interests and through its container shipping division, Maersk Sealand, has led what limited consolidation has taken place, paying $1bn for CSX Corporation's Sealand and the Safmarine and Rennies line five years ago.

Ruling the waves

* Maersk Sealand (Denmark): Owned by AP Moller Maersk, it bought US-based Sealand's liner service in 1999. 788,000 containers; 292 ships.

* Mediterranean Shipping Company (Switzerland): Geneva-based, privately owned. 529,000 containers; 213 ships.

* P&O Nedlloyd (Netherlands): Formed in 1996 from the merger of P&O Containers and Nedlloyd lines. 390,000 containers; 138 ships.

* Evergreen (Taiwan): Founded in 1968 by former sailor Chang Yung-fa. 356,000 containers; 128 ships.

* Hanjin (South Korea): Founded in 1988 through the merger of Hanjin Container Lines and Korea Shipping Corp. 278,000 containers; 69 ships.

Research: Elizabeth Skerritt