News / Shipping-aviation split widens as EMC sells more EVA Air shares

The split between Evergreen Group’s shipping and aviation businesses gained momentum this week as Evergreen Marine Corp (EMC) announced it would sell 50 million of its shares in affiliate EVA Airways for $53m.

EMC, the listed part of the group’s shipping operations, has 726,541,111 shares in EVA, a 13.46% stake; selling 50m shares would reduce its stake to 12.53%.

Taiwanese media has identified the buyer as Chang Kuo-cheng, third son of Evergreen founder Chang Yung-fa, who died in 2016.

Dr Chang’s four sons have been carving up their father’s business empire in an acrimonious fight. The eldest, Kuo-hua, joined the Evergreen shipping operation after graduating, but disagreements with his father, however, saw him leave the business for years, before they reconciled in 2014.

The brothers’ shares in the Evergreen group’s businesses, which include liner shipping, aviation and container and steel manufacturing, are mainly held through Panama-incorporated Evergreen International (EI).

Kuo-cheng is said to favour aviation and is wanting to buy out his eldest brother’s EI shares, as well as the EVA Airways shares held through EMC and Evergreen Steel.

Linerlytica analyst Tan Hua Joo told The Loadstar: “The holding structure does not function well when there are conflicting interests involved. The cross-shareholdings between various Evergreen group entities are now being untangled so that each brother will have direct control over individual entities, while allowing them to exit from minority interests.”

Xeneta’s chief analyst, Peter Sand, told The Loadstar that just as mainline operators like MSC, Maersk and CMA CGM are pursuing integrator strategies, EMC may have a future without an affiliated airline.

He said: “Evergreen faces the choices of any carrier right now – should I go ‘integrator’ or ‘ocean-only’? When cash is not a concern, it can sometime be trickier to make it right. It seems as if Evergreen has made up its mind for a future without an airline.

“Some customers would see this as a showstopper to do business and turn to other integrators – but you need a special skill set as a carrier to take advantage of an air cargo offering. I see this as focusing on the core business, which has always been ocean.”

Mr Tan, however, said the Evergreen shipping and airline business had always functioned independently and explained: “EMC’s interests in EVA Airways were part of the old cross-shareholding structure and it does not have any impact on the ocean shipping business, as it does not rely on EVA’s network”.