For $6.3 million, China’s Cosco Shipping Holdings Co. decided to buy a controlling stake in Hong Kong based Orient Overseas International Ltd. (OOIL) This resulted in a deal that would expand China’s container shipper services, making it the third biggest container shipper in the world as well as expanding their supply chain facilities. China’s government hopes to raise the country’s profile in global shipping aiming to increase their influence over distribution from Asia to Europe.
Last year, Beijing already merged 2 shippers to form COSCO Shipping which will continue to rise as they are becoming a tougher competitor to deal with on the major trade lanes. On Sunday, they offered to buy each OOIL share at a 31.1 percent premium. Following this purchase, COSCO Shipping’s Hong Kong listed share rose as much as 6 percent on Monday marking it as their highest price in almost 2 years. OOIL stock also rose at a 20 percent.
Within the next 2 or 3 years, COSCO predicts that OOIL could boost their profit by 50 percent. Terminals and logistics businesses of OOIL can also bring further synergies to COSCO as well.