Freshfields has advised Hapag-Lloyd AG on the acquisition of United Arab Shipping Company S.A.G

Freshfields Bruckhaus Deringer LLP (‘Freshfields’) has advised Germany’s largest cargo container shipping line Hapag-Lloyd AG (‘Hapag-Lloyd’) on the acquisition of United Arab Shipping Company S.A.G (‘UASC’). UASC is the largest container carrier of the Middle East and was founded by the states of Qatar, Saudi Arabia, Kuwait, Iraq, the United Arab Emirates and Bahrain. UASC is being integrated into Hapag-Lloyd by way of a capital increase in the form of contributions in kind in return for the issuance of new shares equivalent to 28 per cent of the share capital of Hapag-Lloyd. Following the integration, the combined company will operate a fleet of 237 ships and, with the combined fleet, will have a transport capacity of 1.6 million Twenty-feet Equivalent Units (TEUs).

The container shipping sector finds itself in a state of frequent consolidation, with the market participants subjected to pressure due to over-capacity, combined with historically low freight rates. Against this background, the transaction will see Hapag-Lloyd becoming one of the five largest container carriers in the world, with an estimated turnover of $12bn.

The legal basis for the takeover is a Business Combination Agreement (BCA) between Hapag-Lloyd and UASC. This is supplemented by a Shareholder Support Agreement (SSA) in which the anchor shareholders on both sides assume certain obligations in relation to the takeover and commit to backstop an additional equity funding of Hapag-Lloyd in the aggregate amount of $400m.

UASC was founded in 1976 by the six founding states as a “Société Anonyme Golfe” by means of a treaty. This makes it necessary to re-domicile the registered office of UASC to the Dubai International Financial Centre (DIFC) before the transaction is closed, and, in doing so, change its legal form to that of a DIFC Company Limited by Shares. This process and the detailed coordination of the requisite individual steps constituted the most significant legal challenges of the transaction.

The Freshfields team was led by corporate partners Marius Berenbro and Jochen Dieselhorst and antitrust, competition and trade partner Andreas von Bonin.