15 December 2005
CP Ships Shareholders Accept TUI Offer
Toronto - CP Ships Ltd. shareholders have overwhelmingly approved a friendly, $2-billion
(U.S.) takeover bid from Germany's TUI AG, marking the end of a corporate era for the former division of conglomerate Canadian Pacific
Ltd.
Of the votes cast yesterday at a special CP Ships meeting in Toronto, holders of 99.8 percent of the shares approved the sale of the
container shipper to TUI, which launched its bid in August.
TUI, the Hanover-based travel titan, is merging its Hapag-Lloyd AG shipping unit with CP Ships. The brand
name CP Ships will be gradually erased over the next few years and replaced by the Hapag-Lloyd banner, said
Hapag-Lloyd chairman Michael Behrendt, who will be head of the combined container shipper.
He said it's too early to decide how many British-based executives at CP Ships, which is registered in New Brunswick but
has its head office in London, will be transferred to Hapag-Lloyd's headquarters in Hamburg. "We have a decentralized
organization, so we want people in different areas," he said.
CP Ships becomes the first member of the Canadian Pacific family to sail off into the sunset. Its shares are expected to cease trading
next week on the Toronto Stock Exchange.
"In a way, it's tragic for Canada. It's too bad that CP Ships shares will no longer be available for Canadian investors, but it's
part of life," said John McNeil, who joined the board of Canadian Pacific in 1992 and became a director of CP Ships in 2001 after
the conglomerate spun off its five units into separate publicly traded companies.
"Ultimately, directors are meant to represent shareholders, so if someone is willing to make an offer that you feel fully values
the company, well, you can't just turn it aside on the grounds of patriotism," Mr. McNeil said before he went into the final
meeting of CP Ships directors, who gathered at the Fairmont Royal York Hotel in downtown Toronto.
An accounting restatement last year "busted" CP Ships stock price, forcing the historic company to abandon its "ambition
to be the diner and not dinner," Mr. McNeil said. CP Ships reduced previously declared profit by 29 percent to
$101-million over nine quarters.
Calgary-based Canadian Pacific spun out CP Ships and four other units in October, 2001, when the conglomerate dissolved.
Investors in the parent company - if they chose to hang onto their shares in the former divisions or their successors - would still
have the following entities in their portfolio: hospitality chain Fairmont Hotels & Resorts Inc., miner Fording Canadian Coal
Trust, freight mover Canadian Pacific Railway Ltd. and oil and gas producer EnCana Corp., created in early 2002 after the merger of
Alberta Energy Co. Ltd. and former CP unit PanCanadian Petroleum Ltd.
CP Ships began transatlantic service in 1903 with cargo vessels.
One long-time shareholder at yesterday's special meeting, William Balfour, said he's feeling nostalgic about the pending
disappearance of CP Ships as a TSX-listed stock. "I wanted a piece of Canadian history. But CP Ships is sold now and
it looks like Fairmont could be gone soon, too," said Mr. Balfour, 82, a retired chartered accountant. Toronto-based
Fairmont is reviewing a hostile bid from U.S. billionaire investor Carl Icahn for control of the luxury hotel chain.
As for Hapag-Lloyd's plans in 2006 and beyond, Mr. Behrendt expects shipping routes to gain strength, although he cautioned
that "slight" overcapacity in the Pacific could put modest downward pressure on freight rates.
He said Hapag-Lloyd wants to increase its use of CPR's tracks at ports in Montreal and Vancouver.
Ray Miles, the former chief executive officer of CP Ships, has agreed to help Hapag-Lloyd during a transition phase next
year.
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