Container shipping company Hapag-Lloyd AG and Compañía Sud Americana de Vapores, also known as CSAV, have signed a binding contract on merging CSAV’s entire container business with Hapag-Lloyd.

Following the integration, Hapag-Lloyd will rank as the fourth largest liner shipping companies in the world, with some 200 vessels with total transport capacity of around one million twenty food equivalent unites, an annual transport volume of 7.5 million TEUs.

The company’s head office will remain in Hamburg. In addition, Hapag-Lloyd will have a strong regional office in Chile for its Latin America business.

In return for contributing its container business, CSAV will become a new Hapag-Lloyd core shareholder. It will initially hold a 30% stake in the combined entity that can eventually increase to 34%.

“By joining forces, we are creating a stronger, larger and more global company with significant economies of scale and a considerably improved competitive position,” said Oscar Hasbún, CEO of CSAV. “The combination with CSAV, Latin America’s leading container shipping line, considerably strengthens Hapag-Lloyd in this growth market and adds a strong position in the North-South traffic to the company’s global network and to its established strength in East-West traffics.”

The Chilean-based CSAV, was founded in 1872 while the Germany-based Hapag-Lloyd was founded in 1847.

Both companies have already approved the merger but the closing is still subject to regulatory approval.