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PEP: TRADING UPDATE OUTMAERSK: BOTTOM FISHING NO MOREDHL: IN THE DOCKHLAG: GREEN DEALXOM: GEOPOLITICAL RISK AND OIL REBOUND IMPACTZIM: END OF STRIKE HANGOVERCHRW: GAUGING UPSIDEBA: STRIKE RISKDSV: STAR OF THE WEEKDSV: FLAWLESS EXECUTIONKNIN: ANOTHER LOWWTC: TAKING PROFITMAERSK: HAMMERED
PEP: TRADING UPDATE OUTMAERSK: BOTTOM FISHING NO MOREDHL: IN THE DOCKHLAG: GREEN DEALXOM: GEOPOLITICAL RISK AND OIL REBOUND IMPACTZIM: END OF STRIKE HANGOVERCHRW: GAUGING UPSIDEBA: STRIKE RISKDSV: STAR OF THE WEEKDSV: FLAWLESS EXECUTIONKNIN: ANOTHER LOWWTC: TAKING PROFITMAERSK: HAMMERED
CMA CGM has embarked on a quest to acquire Brazil’s largest port terminal operator Santos Brasil, after agreeing to buy almost 48% of the firm from Brazilian fund manager Opportunity.
Santos Brasil operates three box terminals in South America’s largest country – flagship operation Tecon Santos, in the chief container gateway of Santos, as well smaller facilities at Vila do Condo, at the mouth of the Amazon, and Tecon Imbituba, in the far south.
The French carrier has agreed to pay Opportunity R15.30 per share ($2.77) for its 47.55% stake in the company, which is listed on the Brazilian stock exchange, putting a total valuation of the company at $2.39bn, and the CMA CGM offer at $1.13bn.
CMA CGM said that should the offer be approved by Brazil’s competition authority, CADE, and maritime transport authority ANTAQ, it will “launch a takeover bid for the acquisition of up to 100% of the remaining shares, under the same conditions agreed with Opportunity”, a Santos Brasil investor note explained.
It added that the CMA CGM offer represented an implied premium of round 20% over the closing share price of Santos Brasil last Friday, which was R12.71, and an implied multiple of 12.2x EV/Ebitda of the past 12 months, up to the end of Q2 24.
According to S&P’s CapitalIQ platform, in the past 12 months to the end of June, Santos Brasil earned revenues of R2.5bn ($453.7m) and an Ebitda of R1.11bn ($201m), representing a 43.7% margin.
With 864m shares issued, Santos Brasil had a market cap of R10.9bn ($1.98bn) at R12.71 per share.
Santos Brasil added that CMA CGM would begin the process to gain regulatory approval in the next two weeks and, should that be successful, expects to close the deal in the first quarter next year.
Apart from the three box terminals, Santos Brasil also operates a finished vehicle and liquid bulk terminal, as well as three logistics facilities.
“I am pleased that the CMA CGM group has concluded this strategic agreement for the acquisition of Santos Brasil,” said CMA CGM group CEO Rodolphe Saadé. “This significant investment reflects our commitment to strengthening our partnership with Brazil and supporting its growth in the coming years,” he added.
The jewel in Santos Brasil’s portfolio is clearly Tecon Santos – which CMA CGM claimed was the largest container terminal in South America.
The operator has a long-term concession agreement with the port authority that runs until 2047, and an annual handling capacity of 2.5m teu – with potential to expand to 3m teu in the near future – across three berths capable of serving ships up to 14,000 teu.
If cleared by regulators, the deal is will mean the end of any Brazilian ownership of Santos’ container terminals: Brasil Terminal Portuario is a 50:50 joint-venture between Maersk’s APM Terminals and MSC’s TIL; Emabraport is now 100%-controlled by DP World; and Libra Terminais was sold to Filipino terminal operator ICTSI for $195m in a distressed asset sale in 2019.
However, CMA CGM said it had committed to continuing to operate Santos as a common-user facility.
“These strategic facilities will continue to operate as multi-user terminals under the leadership of the current management team, and will continue to focus on improving the quality of their services to satisfy the expectations of their customers,” it said.
It added that the Santos Brasil acquisition would build on its 2017 purchase of Brazilian cabotage operator Mercosul, which it bought from Hamburg Süd during the latter’s acquisition by Maersk – and another sign of the increasing dominance that the largest shipping lines have in the country is that its cabotage segment is now dominated by CMA CGM, Maersk’s Alianca and MSC’s Log-In Logistica. Last October, Hapag-Lloyd also entered the sector, launching the Norcoast 50:50 joint-venture with local logistics firm Norsul.
“CMA CGM intends to further develop its line calls in the various Brazilian terminals and further improve its offering to Brazilian exporters and importers, thereby responding to increasing demand and better addressing consumer needs,” added the carrier.
“The expansion potential of Tecon Santos terminal capacity and its operational excellence will be a useful support to enhance service quality. To meet global demand, CMA CGM intends to accelerate investments in Santos Brasil terminals, with an objective to increase the combined capacity in the coming years, in line with the commitments undertaken by Santos Brasil with port authorities.
“This strategic move will enable CMA CGM to offer seamless connections between Europe, Asia, North America, Caribbean solidifying Brazil’s position as a key hub in the group’s worldwide operations and reinforcing synergies with Mercosul Line affiliate,” it added.
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