BEIJING (AP) - Shares in both China's state-owned shipping company, COSCO, and Orient Overseas (International) Ltd. surged Monday after COSCO agreed to buy its smaller rival for $6.3 billion.
The merger will form a new Asian shipping giant, helping COSCO compete as a wave of consolidation in the industry creates a handful of huge global competitors.
By mid-afternoon Monday, COSCO's shares traded in Hong Kong had jumped 6.1 percent while Orient Overseas' shares soared 20.8 percent.
COSCO, with 311 container ships, ranks among the global industry's top five competitors. Orient Overseas, controlled by the family of former Hong Kong Chief Executive Tung Chee-Hwa, is in the top 10.
The transaction is subject to antitrust review by Chinese, European and U.S. authorities, according to a filing with the Hong Kong Stock Exchange.
The filing said COSCO will pay $10.07 per share (HK$78.67), a premium of 38 percent over Orient's Friday share price on the Hong Kong Exchange. The total price tag for the deal will be $6.3 billion (HK$49.2 billion).
The shipping industry has been struggling amid sluggish global trade and falling rates. Danish shipping firm Maersk acquired Hamburg Sud, a German company, in December, while French shipper CMA CGM bought Singapore-based Neptune Orient Lines last year.