The liner carrier CMA CGM said Friday it has sold a 49 percent stake in its terminal operating subsidiary Terminal Link to China Merchants Holdings, the largest public port operator in China.
China Merchants will pay 400 million euros ($538 million) in the deal, which is expected to close within the first half of 2013, subject to regulatory approval.
CMA CGM characterized the deal as a strategic partnership “in operating and developing container terminals on a global basis and extending their relationships as business partners while capitalizing on favorable global macro trends.”
In 2011, Terminal Link was the 12th largest global terminal operator, with throughput of 8.1 million TEUs. China Merchants invests in and operates a portfolio of terminals located primarily in eight major cities in China's five biggest economic regions (Shenzhen, Hong Kong, Shanghai, Ningbo, Qingdao, Tianjin, Xiamen and Zhanjiang).
China Merchants has in recent years added international investments to its portfolio, with stakes in terminals in Colombo and Africa. The partnership with CMA CGM allows China Merchant to vastly extend its international reach.
“CMA CGM is very confident about this partnership with CMHI, which represents a unique opportunity to accelerate the group development into terminals investments internationally,” said CMA CGM Chairman and Chief Executive Officer Jacques Saadé, in a statement. “Since the beginning of CMA CGM’s presence in China, 21 years ago, the group has always appreciated working with Chinese groups and this strong alliance confirms CMA CGM’s willingness to pursue.”
In the second half of 2012, CMA CGM intimated that it was in discussions to sell a significant stake in Terminal Link. The line suffered greatly during the economic downturn in 2009, and has since turned a corner from a profitability perspective, but still has $5 billion in long-term debt.
"Terminal Link's exposure to terminals in emerging markets and its potential pipeline of new projects present another driver for its volume growth and financial returns in the future,” said China Merchants Chairman Fu Yuning. “On the other hand, CMHI’s existing network of terminal operations in China and globally and the cargo flow business thereby captured will potentially complement and supplement the services offered by Terminal Link, thereby creating synergized benefits mutual to not only both parties but also the respective shipping customers of CMHI and of Terminal Link.” - Eric Johnson