A reorganization of the balance of power is in the offing at the Port of Hamburg: The major Swiss shipping company MSC wants to join the port operator HHLA, which handles the majority of containers in the Hanseatic city.

Hamburg's First Mayor Peter Tschentscher (SPD) spoke on Wednesday of a strategic partnership that would strengthen the port in competition with Rotterdam and Antwerp. Germany's largest container shipping company Hapag-Lloyd reacted angrily to the agreement with MSC. Its major shareholder Klaus-Michael Kühne spoke of an affront and is considering a counter-offer.

"I can only strongly advise Hapag-Lloyd to submit a takeover bid for 49.9 percent of HHLA shares itself and immediately," the billionaire told the Frankfurter Allgemeine Zeitung. If Hapag-Lloyd did not do this itself, he would consider doing it himself "in the short term" via his Kühne Holding AG. There could therefore be a bidding war for HHLA. Kühne holds a 30 percent stake in Hapag-Lloyd, the world's fifth-largest container shipping company, via its holding company. Founded in 1847, the shipping company and its alliance partners account for more than 50 percent of container handling in Hamburg. At the Group's headquarters on Ballindamm, which is steeped in tradition, people reacted with surprise to the agreement with MSC. "This is a super-cold shower for us," said one insider. We feel as if we've been knocked on the head.

COMPETITION ON THEIR OWN DOORSTEP

Hamburg is Hapag-Lloyd's home port. The container shipping company has its large container ships loaded and unloaded at HHLA's Burchardkai terminal, the largest in the Hanseatic city. "We are now paying the terminal fees to our biggest competitor," said the insider. The company referred to the billion-euro dividend payments that have been made to Hamburg in the past two record years. "It may well be that the home shipping company will be driven to Wilhelmshaven," said an industry insider. Last year, Hapag-Lloyd acquired a stake in the Jade-Weser-Port in Wilhelmshaven, Germany's only deep-sea port.

Global market leader MSC is offering HHLA owners, including the City of Hamburg as the largest, 16.75 euros per listed A share. This values the port and logistics company at 1.2 billion euros. Including debt, the figure is 2.6 billion euros, according to a bank insider. According to the Swiss, they have reached a binding agreement with Hamburg that regulates the conditions of the takeover bid and their joint intentions for HHLA. The agreement stipulates that Hamburg will relinquish almost one fifth of its shares in Hamburger Hafen und Logistik AG, thereby reducing its stake to 50.1 percent. MSC is to acquire a 49.9 percent stake in HHLA's share capital.

Finance Senator Andreas Dressel emphasized that Hamburg wants to retain the majority. "We must retain a say." MSC guarantees Hamburg a handling volume of at least one million standard containers (TEU) per year from 2031. Starting in 2025, container throughput is to increase in several stages until then. MSC will establish its German headquarters in Hamburg. Group CEO Sören Toft announced plans to more than double the number of jobs to over 700.

HHLA handles an average of almost seven million containers a year at its three Hamburg terminals. Burchardkai (CTB) and Terminal Altenwerder (CTA) each handle an average of three million TEU. The Tollerort Terminal (CTT) handles around one million. A company spokeswoman did not say how many of these are accounted for by Hapag-Lloyd.

According to LSEG data, the Hanseatic City of Hamburg holds 69.25 percent of HHLA. Its shares rose by more than 49 percent to EUR 17.24 and were thus quoted above the MSC offer, as investors are apparently speculating on a counter-offer.

BOLD BOOTED OUT

Logistics entrepreneur Kühne had also recently expressed an interest in HHLA. He had told the "Frankfurter Allgemeine Zeitung" newspaper that he would like to take over the Hamburg port operator together with Hapag-Lloyd. Accordingly, he would be prepared to spend around half a billion euros for the majority of shares in HHLA and to invest in the modernization of the facilities

In May, after a tough struggle, the German government approved the entry of the Chinese state shipping company Cosco into the HHLA terminal Tollerot with a stake of less than 25 percent. The Chinese group had originally aimed for a 35 percent stake, but the cabinet had already rejected this in October.

According to experts, the German ports are facing major challenges. The head of the Central Association of German Seaport Operators (ZDS), Angela Titzrath - who is also the CEO of HHLA - is calling for massive aid from the German government. "We need to invest large sums of money in the coming years to modernize and expand the ports," she recently told the "Süddeutsche Zeitung".

(Report by Jan C. Schwartz and Anneli Palmen, with assistance from Andreas Rinke, edited by Hans Seidenstücker; if you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).

- by Jan Schwartz and Anneli Palmen