Chile's Compañía Sud Americana de Vapores (CSAV) and German company Hapag-Lloyd are now one step closer to forming the world's fourth largest container shipping company, after the merger was approved yesterday by the European Commission.

CSAV's office in Valparaiso, Chile. Photo: Eduardo Escarez, via Flickr Creative Commons

The two companies entered a binding agreement to merge their container businesses in April.

The deal is in the spotlight of several competition authorities around the world, with the EC's green light now adding to similar approvals from the United States, Turkey, Costa Rica, Ecuador and South Korea.

The combined group would have around 200 container ships, close to one million TEU (twenty-foot equivalent unit) in capacity, and transported cargo volumes of 7.5 million TEU annually, along with US$12 billion worth of business.

In March, CSAV shareholders approved a US$200 million capital increase to finance the purchase of seven new 9,300-TEU container ships, which are set to be built by Korea's Samsung Heavy Industries (SHI) for delivery late this year.

The company expects the new ships, built with the latest technology would have reduced fuel costs, and their incorporation would allow for the replacement of ships currently under rental arrangements.

Hot on the heels of the merger is another proposed German-Chilean transaction, between Hamburg Süd Compañía Chilena de Navegación Interoceánica S.A. (CCNI).

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