Marathon to buy 66% of Global Ship Lease

(NEW YORK) Marathon Acquisition Corp, a New York- based takeover company, agreed to buy 66 per cent of containership owner Global Ship Lease Inc in a transaction the companies valued at about US$1 billion.

Global Ship Lease's current owners, CMA CGM SA, will retain the remainder of the company's shares, Marathon said on Monday in a statement.

The agreement includes about US$511 million in debt, US$310 million in cash and 25.2 million Marathon shares. The transaction is expected to close in the third quarter.

Global Ship Lease owns 12 container ships, which transport finished products, and has an agreement with CMA of France to buy five more ships through July 2009.

The ships will have an average age of 5.5 years. All of the vessels are under long-term charters of at least 11 years with CMA, the world's third-largest container shipping line.

The industry has grown at a 10 per cent compound rate over the last 20 years, and we expect that to continue, Marathon chief executive officer Michael Gross said on a conference call.

With increasing global trade and sourcing overseas of manufacturing and assembly work, container shipping may grow at 15 per cent to 20 per cent annually, he said.

Mr Gross was a founder of the Apollo Management LLP private equity firm along with Leon Black. He is now a managing partner at the New York-based hedge fund Magnetar Capital LLC.

Upon completion of the purchase, Marathon said it would seek the listing of Global Ship Lease shares on the New York Stock Exchange.

Global Ship Lease, as the combined company will be called, will pay a dividend of 9.1 per cent upon completion of the purchase.

Marathon fell 7 US cents, or 0.9 per cent, to US$7.80 in American Stock Exchange trading on Monday.

Source: Business Times