Danish shipping and energy conglomerate A.P. Møller – Mærsk has today signed an agreement to sell Maersk Tankers to APMH Invest A/S, a subsidiary of A.P. Moller Holding for USD 1.17 billion in an all-cash transaction.
A.P. Moller Holding plans to establish an ownership consortium for Maersk Tankers’ fleet with Japan’s Mitsui & Co. Ltd. and other potential partners, in which A.P. Moller Holding will be the majority shareholder.
The proceeds from the transaction will be used to reduce debt, the group said.
As explained, the transaction entails a market upside provision regulating total payment should the product tanker market significantly improve with a rebound in vessel values before the end of 2019.
As a result, two scenarios have been identified:
- if the tanker markets improve based on a fleet value accretion, the adjustment is capped at USD 200 million, which can be exercised once and expires on December 31, 2019.
- if APMHI sells on vessels at a higher price than the purchase price and higher than an agreed hurdle rate, the on-sale adjustment expires on June 30, 2019 or if the purchase price adjustment is called whichever is the earliest.
“Maersk Tankers has served A.P. Moller – Maersk well for almost a century, building an industry-leading position within the product tanker market. As former CEO of Maersk Tankers for more than 10 years, I recognise the importance of having an owner with a long-term market view in this industry, and this is why I am pleased that Maersk Tankers can continue to build on its strong name and position under A.P. Moller Holding,” says Søren Skou, Maersk CEO.
“In determining the best future ownership for Maersk Tankers, it has been imperative for us to assure a financially solid owner with industry insight and a long-term view on the inherent cyclical nature of the tanker industry. This will secure that Maersk Tankers can continue to take advantage of market opportunities, as well as uphold the capabilities and the organisation on which Maersk Tankers global leading market position is built,” says Claus V. Hemmingsen, Vice CEO of A.P. Moller – Maersk and CEO of the Energy division.
The sale is part of Maersk Group’s focus switch to container shipping, ports, and logistics.
The shift saw the group’s oil business, Maersk Oil, being sold off in August to Total S.A for USD 7.45 billion in a combined share and debt transaction.
Maersk said earlier that the separation of its energy businesses was decided as a result of recent years’ oil and gas industry and market developments.
Declining spot market rates and vessel impairments have pushed tanker shipping company Maersk Tankers to a USD 483-million loss in the second quarter of 2017 from a profit of USD 28 million recorded a year earlier.
The vessel impairments worth USD 464 million were due to an expected continuation of the lower asset valuations, the company said.
The group is yet to find buyers for Maersk Drilling and Maersk Supply Service, which are expected to be found before the end of 2018.
Under the terms of the deal, A.P. Moller Holding will take over Maersk Tankers’ entire organisation, portfolio and obligations. As part of the agreement, it would assume all outstanding capital commitments of Maersk Tankers’ fleet renewal programme.
The closing of the transaction is not subject to merger control approvals and is expected to take place in October 2017.
“As the transaction is between related parties, fairness opinions have been obtained from Morgan Stanley & Co. Int. Plc. and DNB Bank ASA. The conclusions from these fairness opinions confirm that the transaction value including the agreed price adjustment mechanism is fair from a financial point of view,” Maersk Group said.
Maersk Tankers has a fleet of 161 product tanker vessels, with 80 owned vessels, across four segments; Intermediate, Handy, Medium Range and Long Range 2.
As informed, the company will continue trading as Maersk Tankers, using the Maersk’s seven-pointed star-logo as part of its brand.
Furthermore, due to the transaction, Maersk Tankers will be classified as held-for-sale and discontinued operations in the Interim Report Q3 2017 for APMM.
Maersk said that the transaction has no impact on APMM’s financial guidance for 2017.