Maersk makes offer for P&O Nedlloyd

A.P.

Moller-Maersk has agreed to purchase rival

Royal P&O Nedlloyd for $3 billion (2.3 billion euros). The board of P&O Nedlloyd supports the A.P. Moller-Maersk offer, as the price represents a 40% premium based on P&O Nedlloyd's most recent closing share price.

For its most recent quarter, revenues at P&O Nedlloyd were up 16% to $1.7 billion and operating profit improved 252% to $74 million. P&O Nedlloyd managed to increase average freight rates 14% and volume increased 5% during the quarter.

"In this fragmented industry we believe these two highly complementary businesses will achieve far more together than apart," says Andrew Land, chairman of P&O Nedlloyd.

P&O Nedlloyd, which was admitted to the Amsterdam Stock Exchange in March 2005, reported 2004 operating profits of $401 million. Revenues were $6.7 billion. The company says that average freight rates increased 13% and its operating margins were 6%. The company also recently christened an 8,450 twenty-foot-equivalent unit (TEU) ship — the P&O Nedlloyd Mondriaan.

A.P. Moller-Maersk Group reported $28 billion in net revenues for 2004. Increased container volumes and rates, along with higher rates for its tankers, helped it increase revenues by approximately 6% from 2003. Net revenue from container shipping and related activities were $16 billion. After taxes, Maersk reported $1.4 billion in container shipping and related revenues in 2004.

Based on current projections, Maersk anticipates that this transaction over time will lead to a reduction of about 1,500 full-time positions worldwide, or 5% of the combined workforce. The joint business will have its corporate headquarters in Copenhagen, Denmark.

The A.P. Moller-Maersk Group's fleet includes more than 250 vessels with a total deadweight of approximately 12 million tons. P&O Nedlloyd's operating fleet stands at 154 vessels.

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