Cosco Shipping Holdings and Shanghai International Port (SIPG) have made a joint offer to purchase all issued shares of Orient Overseas International (OOIL) for HK$49bn ($6.3bn) at an offer price of HK$78.67 ($10.06) in cash.
The offer is dependent upon the satisfaction of several pre-conditions such as the necessary regulatory approvals and approval from Cosco Shipping Holdings shareholders.
Cosco Shipping Holdings will hold 90.1% upon the completion of the deal if all shareholders tender their shares, while SIPG will hold 9.9% of OOIL.
OOIL's controlling shareholders had previously agreed to sell their 68.7% stake at that price to Cosco Shipping.
The combination of Cosco Shipping Holdings and OOIL is expected to deliver a stronger competitive advantage for the companies.
OOIL is the seventh largest container shipping company in the world, possessing extensive container shipping routes and networks, while the deal will see Cosco become the world's third largest container liner.
The deal will also increase the size of Cosco Shipping's fleet to more than 400 vessels and a capacity exceeding 2.9 million TEUs (twenty-foot equivalent units).
Cosco Shipping Lines and OOIL will continue to operate under their respective brands upon closing, providing container transport and logistic services.
Cosco Shipping Holdings chairman Wan Min said: "We respect OOIL’s management team and its expertise, not to mention its people, brand and culture.
"Our company remains committed to enhancing Hong Kong as an international shipping centre. Following completion, we will continue to invest and strengthen our industry leadership, providing a more extensive platform for the employees of OOIL to excel.”
The company noted that by leveraging their strengths and achieving synergies, the businesses will enhance their operating efficiencies and competitive positions to achieve sustainable growth in the long term.
Both firms are members of the Ocean Alliance, which also includes CMA CGM and Evergreen Marine. They are expected to continue to work together under this framework.
OOIL executive director Andy Tung said: "We are proud of the business we have built and the people who have been building it.
"This decision has been carefully considered and we believe it helps ensure the future success of OOIL. We are confident that Cosco Shipping Holdings is the right partner for us."