Cosco’s acquisition of OOCL may face further hurdles
Although they resumed trading on the Shanghai Stock Exchange (SSE) this week, Cosco’s take over of OOCL could still hit a stumbling block.
Cosco’s shares were suspended two months ago and the SSE issued a letter of enquiry on July 18th seeking clarification on two points of the proposed deal. The first is whether it would clear anti trust and monopoly regulators around the world, and secondly, how Cosco intend to keep OOIL listed on the Hong Kong Stock Exchange as previously agreed.
Being allowed to resume trading must mean that the assurances given were satisfactory, however, the take over does still seem to be subject to regulatory review within other countries.
According to OOIL, the offer is ‘dependent upon the satisfaction of pre-conditions, which include the necessary regulatory approvals as well as approval from Cosco Shipping Holdings shareholders. The controlling shareholder, who currently holds 68.7% of OOIL, has irrevocably undertaken to accept the offer’.
Cosco have agreed to maintain OOIL’s listing on the stock exchange, and will make sure that the public shareholding ratio of OOIL meets the requirements of the Hong Kong Stock Exchange (HKSE).
Regulatory and shareholder approval are paramount to the deal going ahead, and it presumably isn’t going to be quick. In reality it may be more difficult to adhere to the terms agreed.
For more information on the take over, please take a look at this video