Maersk Makes Change of Course By Splitting Energy and Freight

Hit hard by low oil and freight prices, Maersk based in Denmark will split and focus on logistics and transport, while finding a way out of energy in a revamp that has been highly anticipated aimed at helping to revive the company’s fortunes.

The conglomerate has been in business 112 years and will not focus on core businesses that include its Maersk Line, Damco, APM Terminals, Maersk Container Industry and Svitzer, while looking for solutions for its small energy operations.

Investors were cautiously optimistic with shares of Maersk trading up Thursday. However, some have said that the company worth $30 billion had not done enough.

One analyst in Europe said the decision was likely the solution that was most pain free compared to other scenarios but the company could have gone even further.

A weak market has been hitting the larger lines, which heavily invested in huge ships, largely to operate the main trade rout of Asia to Europe.

Sources in the industry questioned whether enough work existed for the largest container vessels at this time putting even more pressure on the profits of different companies.

Michael Pram Rasmussen the chairman of Maersk said that separating the logistics and transports business from the oil businesses would give the two the ability to focus on their own markets.

He added that both are facing different competitive environments and underlying fundamentals.

Maersk announced that it would be looking for solutions for its businesses of oil and those that are oil related, which are going to split either in combination or individually in the form of mergers, joint ventures or listing.

No details were released by the company as to how far the process already had progressed or if it was talking already to any potential partners, but did say it would be completed within the next 24 months.

The head of Maersk Drilling Claus V. Hemmingsen will head up the energy division of Maersk through the split and serve as the vice CEO of that group, starting October 1.

Maersk hope that through splitting it can shed a conglomerate discount through allowing markets to value the different businesses on an individual basis.

The group, which is controlled by the family of the same name, was founded by A.P. Moller in 1904 and turned into the conglomerate it is today through operating in more than 130 countries by Maersk Mc-Kinney Moller, his son, who until his death in 2012 at the age of 98 was active within the business.

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David Glass

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