COSCO 'bidding' for Orient Overseas

Workers are seen on a COSCO container vessel, as it arrives to Cocoli locks after crossing the Panama Canal to the Pacific side. [Photo/Agencies]

Chinese media outlet Caixin reported China COSCO Shipping Corp and other liners will bid for Orient Overseas International Ltd, owner of Hong Kong's biggest container-shipping line.

Evergreen Marine Corp Taiwan Ltd and CMA CGM SA are also bidding, according to the report, which cited an unidentified employee of COSCO Shipping.

Orient Overseas stock jumped as much as 12 percent, the biggest intraday gain since March 2011.

The company has a market value of about HK$26.8 billion ($3.5 billion).

A representative at COSCO Shipping's media relations department said the company wasn't aware of the bidding.

Evergreen Marine's president and spokesman Lee Mong-jye couldn't immediately be reached at his office for a comment.

Representatives for Orient Overseas and CMA CGM didn't immediately respond to emails seeking comment.

Asian container lines, faced with a prolonged trade slowdown and depressed freight rates, are set for further consolidation in 2017 as firms continue joining forces, the head of Danish industry behemoth AP Moller-Maersk A/S and the chief of Hyundai Merchant Marine Co have said.

"The industry has seen a lot of consolidation and OOCL is among the last few that has a certain scale," said Rahul Kapoor, a director at Drewry Financial Research Services Ltd in Singapore.

Last year saw the collapse of South Korea's Hanjin Shipping Co, a mega merger among Japanese rivals and the sale of Singapore's shipping flagship, Neptune Orient Lines Ltd to CMA CGM.

An overly optimistic expectation of a trade recovery following the 2008-09 global financial crisis, prompted shipping companies to order ever-larger vessels, with some stretching longer than the Eiffel Tower.

As capacity piled up, the companies tried to under-bid each other on freight rates to lure clients, causing shipping rates to drop to unprofitable levels and sinking the global container-shipping industry into losses.