CHILE's Compania Sud Americana de Vapores (CSAV) and Germany's Hapag-Lloyd have signed a binding agreement to merge and become the world's fourth-largest container shipping line.

Relevant corporate bodies of both companies have approved though the closing of the transaction is subject to approval of competition authorities.

The company will remain in Hamburg, where it will manage 200 ships totalling one million TEU, with an annual transport volume of 7.5 million TEU and a combined revenue of EUR9 billion (US$12.4 billion).

CSAV will initially hold a 30 per cent. The parties agreed on a capital increase of EUR370 million once the deal is done, to which CSAV will contribute EUR259 million, said the Hapag-Lloyd statement.

"This will then increase CSAV's share of Hapag-Lloyd to 34 per cent. A second capital increase of EUR370 million will be linked to Hapag-Lloyd's planned stock exchange listing," said the statement.

Said Hapag-Lloyd chairman Michael Behrendt: "The transaction increases the value of the company and therefore also the value of our shareholders' shares."

Said CSAV chief executive Oscar Hasbun: "By joining forces, we are creating a stronger, larger company with significant economies of scale and a considerably improved competitive position."

The two companies' order books are complementary. "While, at the end of April, Hapag-Lloyd will put into service the last of ten 13,200 TEU vessels ordered for the Far East trade, CSAV still has seven vessels, each of 9,300 TEU, scheduled for delivery in 2014 and 2015," said the press release.

Separately, Reuters reported that South Korea's Samsung Heavy Industries said it was proceeding with a CSAV order worth KRW642.9 billion (US$617.67 million) to build seven containerships.

These containerships are designed for the South American trade. "This means that we will have a young and cost-efficient fleet. The use of optimum tonnage in the trades is one of the key prerequisites for successful operations in the face of international competition," said Mr Hasbun.

Said Mr Behrendt: "I am delighted that we have succeeded in concluding this partnership through which our two companies are playing an active part in consolidating the liner shipping industry."