A.P. Moller - Maersk (Maersk) announced the termination of a sale deal with China International Marine Containers Ltd. (CIMC) to acquire Maersk Container Industry (MCI), a manufacturer of refrigerated containers, from Maersk following the rejection from US regulators.

In September 2021, Maersk agreed to divest from Maersk Container Industry (MCI) and sell it to Chinese manufacturer CIMC for US$987.3 million.

But to push through with the sale, the parties needed to secure regulatory approvals from a number of jurisdictions, including the United States.

"The parties agreed to terminate the agreement because of significant regulatory challenges preventing the closing of the transaction," Maersk said in a statement, explaining the fallout of the deal.

The intended divestment was announced on September 28 last year and was expected to close in 2022.

"It is unfortunate that the transaction will not happen despite the efforts of all parties involved," said Patrick Jany, CFO at A.P. Moller - Maersk, adding that throughout the process, MCI has performed very well.

"Maersk will continue to be a proud owner of MCI for the foreseeable future, and we will now assess the best structural set-up for MCI to ensure the long-term development of the business," Jany added.

US regulators object to planned sale

Meanwhile, the US Department of Justice in objecting to the deal said the proposed sale would have combined two of the world's top four producers of insulated and reefer containers making the business a dominant player in the industry.

"The proposed transaction would have combined two of the world’s four suppliers of insulated container boxes and refrigerated shipping containers. It would also have consolidated control of over 90% of insulated container box and refrigerated shipping container production worldwide in Chinese state-owned or state-controlled entities," said Jonathan Kanter Assistant, attorney-general of the Justice Department's Antitrust Division.

This could then prove detrimental to consumers, the Justice Department added.

"American consumers depend on the global cold supply chain for many of our everyday essentials. CIMC's acquisition of MCI threatened to harm this critical aspect of our economy leading to higher prices, lower quality, and less resiliency in global supply chains," Kanter added.

"It would have cemented CIMC's dominant position in an already consolidated industry and eliminated MCI as an innovative, independent competitor."

"The deal also would have substantially increased the risk of coordination among the remaining suppliers in the marketplace, most of whom would have been aligned through common ownership and related alliances," the attorney-general added.

Founded by Maersk in 1991, MCI has been a part of the company for more than 30 years. Over the years, it has transformed into a business focusing entirely on manufacturing refrigerated containers. MCI currently employs 2,300 people in China and Denmark.