In September last year, the Danish company agreed to sell Maersk Container Industry (MCI) to Chinese manufacturer CIMC for $987.3 million. The deal was subject to regulatory approvals in a number of jurisdictions, including the United States.
The US Department of Justice said the proposed sale would have combined two of the world’s four largest manufacturers of insulated and refrigerated containers and outsourced more than 90% of the production of such boxes to Chinese manufacturers.
“American consumers depend on the global cold supply chain for many of our everyday essentials,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “CIMC’s acquisition of MCI threatened to damage this vital aspect of our economy, leading to higher prices, lower quality and less resilience in global supply chains.”
The Department of Justice said it would have placed CIMC in a dominant position in the industry.
“It would have cemented CIMC’s dominant position in an already consolidated industry and eliminated MCI as an innovative and independent competitor,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division.
“The deal would also have significantly increased the risk of coordination among the remaining vendors in the market, most of whom would have been aligned through common ownership and related alliances.”
The supply chain has been a major focus in the United States for the past two years in the Covid pandemic which has led to serious problems, and relations between the United States and China have also been strained.
Maersk said in a statement that together with CIMC, it announced the termination of the agreement on Thursday due to “significant regulatory difficulties”, without referring to the US Department of Justice’s announcement.
Patrick Jany, Chief Financial Officer of Maersk, said: “It is regrettable that the transaction has not taken place despite the efforts of all parties involved. Throughout the process, MCI performed very well thanks to the dedication of all its employees. Maersk will continue to be a proud owner of MCI for the foreseeable future, and we will now evaluate the best structural setup for MCI to ensure the long-term development of the business.
CIMC commented: “Despite the efforts of both parties, the review of the merger is currently facing great uncertainty, both parties have decided to terminate the transaction after a full and careful evaluation. The termination of the operation will not have a material adverse impact on the main activities of the group.
“Going forward, the group will continue to focus on developing its cold chain business to expand its revenue streams.”
MCI was founded in 1991 and employs 2,300 people in Denmark and China.
Update adds comments from CIMC
Copyright © 2022. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited.