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Cosco gains US$1 billion from share sale of box maker CIMC

COSCO is expected to gain US$1 billion from selling most of its stake in China International Marine Containers (CIMC), reports Newark's Journal of Commerce

02 September 2020 - 19:00

COSCO is expected to gain US$1 billion from selling most of its stake in China International Marine Containers (CIMC), reports Newark's Journal of Commerce.

Cosco has a 22.7 per cent stake in CIMC that will decrease to 4.7 per cent after the sale. Further proposed deals include Cosco selling all of its remaining shareholdings.



Cosco confirmed the sale in a statement to the Hong Kong stock exchange, which detailed a letter of intent for the share sale to a state-owned assets management company in Shenzhen.



Cosco said the sale is 'is expected to optimise the asset structure of the group' and would help 'the development of the shipping leasing business, the container manufacturing business'.



China Merchants Group is now CIMC's largest shareholder, with CIMC currently having a large semi-trailer manufacturing business in the US.



'It appears to be a state-mandated move to allow China Merchants to consolidate its control of CIMC, with Cosco to exit completely from CIMC while building its own container manufacturing business,' said principal at Liner Research Services Tan Hua Joo.



'However, the logic of having Cosco and CIMC compete directly in the same industry is not something that I can comprehend,' said Mr Hua.



Cosco Container Industries and Cosco subsidiary Long Honour Investments will sell 645 million CIMC shares at a price of $1.44 each to Shenzhen Capital Operation Group, which is controlled by the state-owned Assets Supervision and Administration Commission of Shenzhen.



Some $919.3 million will be generated from the sale, while the Shenzhen company will also acquire shares from two minority shareholders to become CIMC's largest shareholder with a 29.8 per cent stake, and China Merchants will maintain a 24.6 per cent interest.



The sale happened a day before CIMC reported a first-half loss of $26.5 million compared to a $99.26 million net profit last year. The Covid pandemic hurt its box-making business, which saw sales of dry containers fall 37.5 per cent to 358,300 TEU in the first half.


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