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China's CIMC to buy Maersk's cold container business for $1.1bn

World's largest shipping box maker targets refrigerated market

CIMC said its leverage will increase 'slightly' after buying Maersk Container Industry. (Photos courtesy of CIMC and Maersk)

HONG KONG -- China International Marine Containers (Group), the world's largest maker of shipping containers, is set to expand its reach in refrigerated ones via a $1.08 billion deal with Danish conglomerate A.P. Moller-Maersk.

Shipping containers have been in focus amid disruptions to global transport that have seen freight rates climb to record levels, with some ports stuck with mountains of empty containers while exporters elsewhere struggle to find the steel boxes to send their goods overseas.

Maersk Container Industry (MCI), a leading maker of what are known as reefer containers, generated 3.78 billion Danish krone ($595 million) in revenue last year, down 3% from a year before. Its net profit rose 11%, however, to a record high of 173.9 million krone.

While MCI's administrative, testing and research operations are based in Denmark, it builds its containers in the northern Chinese port city of Qingdao. It also has more than 400 service centers globally.

CIMC aims to complete the purchase of MCI within a year, subject to regulatory approval.

"By leveraging technology and innovation we want to create a new growth platform within cold chain," said Mai Boliang, chairman and chief executive of CIMC, in a statement.

"I am very impressed by the company's results and innovation. I am convinced that by combining MCI's talented people and technologies with our global refrigeration business we will create an exciting future together as a key partner for our customers," he said.

CIMC, majority controlled by state-owned companies Shenzhen Capital Group and China Merchants Group, has been looking to expand its main container and transportation equipment business through acquiring technologies and know-how.

CIMC said in its filing to the Hong Kong Stock Exchange that the MCI deal will help it "to master the core refrigeration technology of marine refrigerators and enhance our core capabilities in the field of cold chain equipment."

CIMC is already a major player in reefers, with capacity to make around 90,000 such containers a year at two factories, according to its website. It builds around 2 million standard containers each year.

CIMC said it intends to finance the MCI purchase through its own funds and external sources. The company had 13.15 billion yuan ($2.04 billion) in cash as of June 30 when its total bank loans and external borrowings reached 45.72 billion yuan. The company warned in the Tuesday filing that its debt-to-asset ratio "will increase slightly" after the deal.

For Maersk, the sale comes as a result of a strategic review announced in May.

"The divestment of MCI is part of A.P. Moller-Maersk's business transformation, where focus is on being an integrated container transport and logistics company creating customer value across the entire supply chain," said Henriette Hallberg Thygesen, chief executive of fleet and strategic brands, in a statement.

CIMC investors showed little excitement over the deal, with the group's Hong Kong-listed shares trading 0.4% lower late Tuesday afternoon, while its Shenzhen stock closed down 2.7%. Maersk shares meanwhile were 2.5% lower in early trading in Copenhagen.

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