CP Ships Accepts $2B Offer

Monday, August 22, 2005
The CP Ships Limited Board of Directors has unanimously recommended that shareholders accept an offer from TUI AG to acquire CP Ships in an all-cash transaction for US $21.50 per share or about $2 billion on a fully diluted basis. Including the assumption of net debt of $0.3 billion at 30th June 2005, the transaction has a total value of $2.3 billion.

The offer price represents a premium of about 28% over CP Ships average closing share price over the past three months. TUI, the parent of Hapag-Lloyd, plans to combine Hapag-Lloyd and CP Ships to create the world's fifth-largest container shipping company with a fleet of 139 ships (and a further 17 on order) for a capacity of approximately 400,000 teu on over 100 routes spanning the globe. Before the effects of consolidation, the combined shipping business would have had sales of approximately $7.0 billion and EBITDA of $731 million in 2004.

"Having improved the performance of the business after a difficult 2004, the Board undertook a review of our business and its potential opportunities. This transaction represents immediate and attractive value for our shareholders and the Board has recommended it unanimously," commented CP Ships CEO Ray Miles.

"The combination of Hapag-Lloyd and CP Ships will create a company with the strength and scale to compete effectively in an industry where consolidation is changing the landscape. Furthermore, the combined company will offer enhanced resources and opportunities for both CP Ships and Hapag-Lloyd's customers and employees," said Michael Behrendt, Hapag-Lloyd CEO.

"This transaction will enhance growth opportunities over the longer term and will enhance value for TUI's shareholders through CP Ships' earnings potential and the realization of synergy potential in operations and ship networks," said Dr Michael Frenzel, TUI CEO. "Our enlarged shipping business will be well positioned to take advantage of the strong long term growth dynamics in the container shipping industry. This is both a compelling financial and strategic opportunity for us."

TUI's offer to acquire CP Ships is subject to customary closing conditions including acceptance by shareholders representing two thirds of the outstanding CP Ships shares and the receipt of necessary regulatory approvals in Canada, the United States, Europe and certain other countries. TUI has secured necessary bank financing to fund the offer. The transaction is expected to close during the fourth quarter of this year.


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