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CSX Selling Sea-Land's International Operations

Shipping: Danish firm A.P. Moeller plans to buy the container unit for $800 million and merge it with its Maersk Line.

July 23, 1999| From Times Staff and Wire Reports

Danish shipping giant A.P. Moeller said Thursday it will pay $800 million for the international operations of CSX Corp.'s Sea-Land Service Inc., the largest container ship operator at the Port of Long Beach.

In a letter dated Thursday, top officials from Moeller's Maersk Line, CSX and Sea-Land said they did not anticipate any disruption in shipping schedules or cargo volume at U.S. ports because of the merger.

However, Hal Hilliard, marketing manager for the Port of Long Beach, said port officials were in Richmond, Va., on Thursday talking to Maersk and Sea-Land on how the merger might affect Sea-Land's service between Long Beach and Hawaii and Guam.

Officials were also discussing how the deal might affect a joint proposal by Maersk and Sea-Land to build a new terminal at either Long Beach or the neighboring Port of Los Angeles.

"We're very much interested in how this whole thing sorts out," Hilliard said.

Sea-Land is the largest container ship operator at the Port of Long Beach, moving more than 400,000 cargo containers a year. Maersk is No. 3, moving 350,000 containers. The Long Beach port handles more containerized cargo than any port in the U.S.

Maersk and Sea-Land, which have been part of an operating alliance since 1991, do not call on nor have terminals in Los Angeles, the second-busiest U.S. container port. But last year they threw Long Beach harbor into competition against the Port of L.A. to see which facility could better accommodate a new joint-operations terminal the companies want to build.

Port of L.A. spokesman Al Fierstine would not comment on the joint-operations terminal.

Richmond, Va.-based CSX, which also owns the third-largest U.S. railroad, would retain Sea-Land's U.S. domestic operations and shipping to and from Alaska, Hawaii, Puerto Rico and Guam.

The proposed merger would boost Moeller's oceangoing capacity by two-thirds to 500,000 containers while giving CSX the cash to pay down debt from its $4.3-billion purchase of 42% of Conrail Inc.

Maersk Line would be renamed Maersk-SeaLand and would have offices in 100 countries. Sea-Land would add 70 vessels and 200,000 containers to Maersk's fleet of 180 vessels and 300,000 containers.

The companies expect the transaction to be completed within four months. They made no comment about potential job cuts.

CSX fell 81 cents to close at $49.13 on the New York Stock Exchange.

Separately, CSX said its earnings slid 36% in the second quarter to $97 million, or 45 cents a share, because of costs involved in absorbing Conrail Inc. and a decline in coal exports. The per-share results came in slightly lower than analysts' estimates. Revenue rose 5.1% to $2.62 billion, reflecting the acquired Conrail.

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