With the sale agreement, CFIUS has notified parties involved in the deal that there are no unsolved issues linked to US national security, according to Cosco’s filing, which didn’t elaborate on a buyer or valuation. Under the accord with the departments of Homeland Security and Justice, pending its disposal, the ownership of the terminal will be transferred to a trust, whose principal trustee must be a US citizen but not a shareholder of OOIL. China approval: The transaction had won a nod from China’s Anti-Monopoly Bureau about a week ago, removing the final obstacles to the creation of a container line that would become the world’s No 3 by capacity after AP Moller-Maersk A/S and Mediterranean Shipping Co. Cosco’s acquisition of OOIL is part of a sweeping consolidation within the industry that has struggled with overcapacity, a plunge in freight rates and widening losses.
OOIL has been operating Long Beach’s Middle Harbor Terminal under a 40-year lease that started in 2012. It is one of the world’s most automated shipping facilities and its redevelopment is due to be completed next year. Port of Long Beach, together with the adjacent Port of Los Angeles, is the largest shipping facility in the US About 70% of shipping volume at Long Beach is cargo from China. The stepped up scrutiny of Chinese takeovers of US assets comes as trade tensions between the world’s two biggest economies turned into a tariff war, with both the countries imposing levies on each other’s goods last week. Since the Trump administration took office last year, at least 10 Chinese deals for US firms have collapsed.
Naval support: Cosco also provides important logistics support to the Chinese navy, especially in support of its activities beyond the Chinese mainland, according to Timothy Heath, a senior international defence research analyst at the Rand Corp. CFIUS, which is led by the Treasury Department, doesn’t comment on its reviews, which are confidential. The OOIL deal isn’t the first time Cosco has attracted attention over its plans at the Long Beach port. In the 1990s, some members of Congress raised security concerns about a plan to build a container terminal at a closed naval station and lease it to Cosco. A review by CFIUS at the time found “no credible evidence” that Cosco, which had been operating at the port since 1981, could threaten the US.
Sources and photo-credits: Bloomberg, Gulf Times