Combined, the two will become one of the worlds leading container shipping companies

Combined, the two will become one of the world's leading container shipping companies

China shipping giant Cosco Shipping Holdings has made an offer to acquire Hong Kong's Orient Overseas International in a deal that could make Cosco the world's third largest container liner.

In filings with the Hong Kong and Shanghai stock exchanges at the weekend, the companies said an offer of HK$78.67 had been made by Cosco for each Orient Overseas (OOIL) share – a premium of around 37.8% over the closing price of HK$57.10 on its last trading date.

Cosco, which through its various subsidiaries provides a range of container shipping and terminal services covering the whole shipping value chain for both international and domestic customers, says the acquisition will enable both companies to realise synergies and enhance profitability.

"The outstanding management system and service capabilities, as well as established global shipping network, of Cosco Shipping Holdings and OOIL can provide customers of both with more diversified product offerings and better service experience," the company added.

Should the deal go ahead, combined, they will become one of the world's leading container shipping companies with more than 400 vessels and capacity exceeding 2.9m TEUs including order book.

In addition to an increase in scale, both parties will benefit from access to a combined global sales network and customer base, shipping network optimisation, and advanced IT systems.

The $6.3bn cash deal is the fourth largest shipping consolidation announced in the last year and follows the bankruptcy last year of South Korea's Hanjin, the world's seventh largest shipping company.

The move could be seen as a symbol of China's ambitions to strengthen its hold over global shipping, which fits in with the country's 'Belt and Road' initiative that aims to expand and exert control over supply chains from Asia to Europe. It also increases the pressure on Maersk and the Mediterranean Shipping Company, some of its largest rivals.

In December last year, Maersk Line, the container shipping unit of Danish conglomerate AP Moller-Maersk, reached an agreement with the Oetker Group to acquire German shipping line Hamburg Süd, in a move designed to boost its global capacity share and its presence on north-south routes.

Maersk Line to buy German shipping line Hamburg Süd

Mariko Semetko, an analyst at the debt agency Moody's, told the Financial Times: "The competitive environment, persistent oversupply and resulting pressures on freight rates have driven industry consolidation. We expect that this trend will continue."

Cosco Shipping, which has been acquiring ports around the world, most recently securing deals in Spain and Greece, will require approval from the Committee on Foreign Investment in the US in order for the deal to be cleared.