CMA CGM is buying Brazil's largest port terminal operator for a nearly 48% stake
CMA CGM has begun looking to buy Santos Brasil, Brazil's largest port terminal operator, after it agreed to buy a nearly 48 per cent stake in the company from Brazilian fund manager Opportunity.
Santos Brazil operates three container terminals in South America's largest country - its flagship operation Tecon Santos at the main container gateway Santos, and smaller terminals such as Vila do Condo at the mouth of the Amazon River and Tecon Imbituba at the southernmost tip.
The French carrier has agreed to pay Opportunity 15.30 rand ($2.77) per share for its 47.55 percent stake in the company, which is listed on the Brazilian stock exchange, valuing the company at a total of $2.39 billion, compared with CMA CGM's offer of $1.13 billion.
If the offer is approved by Brazil's competition authority CADE and Maritime Transport Authority ANTAQ, CMA CGM said it would "launch a tender offer for up to 100 per cent of the remaining shares under the same conditions agreed with Opportunity", a note from Santos Brasil investors explained.
It added that CMA CGM's offer represents an implied premium of about 20 per cent to Santos Brasil's closing price of R12.71 on Friday and an implied multiple of 12.2 times trailing 12-month EV/Ebitda to the end of Q2 2024.
According to Standard & Poor's CapitalIQ platform, Santos Brasil had revenue of 2.5 billion rand ($453.7 million) and earnings before interest, tax, depreciation and amortization of 1.11 billion rand ($201 million) in the past 12 months to the end of June, with a profit margin of 43.7 percent.
Santos Brazil has issued 864 million shares with a market value of 10.9 billion rand ($1.98 billion) at a price of 12.71 rand per share.
Santos Brazil added that CMA CGM would begin the process of obtaining regulatory approval within the next two weeks and, if successful, expected to close the deal in the first quarter of next year.
In addition to the three container terminals, Santos Brasil operates a vehicle and liquid bulk terminal, as well as three logistics facilities.
"I am delighted that CMA CGM Group has reached a strategic agreement to acquire Santos Brasil," said Rodolphe Saade, Chief Executive Officer of CMA CGM Group. "This significant investment reflects our commitment to strengthening our partnership with Brazil and supporting its growth in the years ahead," he added.
The brightest star in Santos Brasil's portfolio is undoubtedly the Tecon Santos terminal, which CMA CGM claims is the largest container terminal in South America.
The operator has a long-term concession agreement with the Port Authority, valid until 2047, with an annual handling capacity of 2.5 million TEUs for three berths, with the potential to expand to 3 million TEUs in the near future, accommodating vessels up to 14,000 TEUs.
If approved by regulators, the deal would spell the end of Brazilian ownership of the Santo container terminals: Brasil Terminal Portuario is a 50-50 joint venture between APM Terminals, owned by Maersk, and TIL, owned by Mediterranean Shipping; Emabraport is now 100% owned by DP World; Libra Terminais was sold to Philippine terminal operator ICTSI for $195 million ina distressed asset sale in 2019.
However, CMA CGM said it was committed to continuing to operate the Port of Santos as a public user facility.
"These strategic facilities will continue to operate as multi-user terminals under the current management team and will continue to focus on improving service quality to meet customer expectations," the company said.
The company also added that the acquisition of Santos Brasil would consolidate its 2017 plan to acquire Brazilian coastal transport operator Mercosul, which it acquired from Hamburg South America when it was acquired by Maersk. In addition, CMA CGM, Maersk's Alianca and MSC's Log-In Logistica now dominate the Brazilian clocarketing market, which also demonstrates the increasing dominance of large shipping companies in Brazil. In October last year, Hapag-Lloyd also entered the field with the formation of a Norcoast 50:50 joint venture with local logistics firm Norsul.
"Cma CGM intends to further develop its routes to various terminals in Brazil and further improve its services to Brazilian exporters and importers in order to meet the growing demand and better meet the needs of consumers," the carrier added.
"The capacity expansion potential of Tecon Santos terminal and its operational excellence will provide useful support for improving service quality. To meet global demand, CMA CGM intends to accelerate its investment in the Santos Brasil terminal with the goal of increasing the combined capacity in the coming years to meet the commitments made by Santos Brasil to the port authorities.
"This strategic move will enable CMA CGM Ferries to provide seamless connectivity between Europe, Asia, North America and the Caribbean, consolidate Brazil's position as a key hub for the Group's global operations and strengthen synergies with the Mercosur shipping subsidiary," the company added.
Santos Brazil operates three container terminals in South America's largest country - its flagship operation Tecon Santos at the main container gateway Santos, and smaller terminals such as Vila do Condo at the mouth of the Amazon River and Tecon Imbituba at the southernmost tip.
The French carrier has agreed to pay Opportunity 15.30 rand ($2.77) per share for its 47.55 percent stake in the company, which is listed on the Brazilian stock exchange, valuing the company at a total of $2.39 billion, compared with CMA CGM's offer of $1.13 billion.
If the offer is approved by Brazil's competition authority CADE and Maritime Transport Authority ANTAQ, CMA CGM said it would "launch a tender offer for up to 100 per cent of the remaining shares under the same conditions agreed with Opportunity", a note from Santos Brasil investors explained.
It added that CMA CGM's offer represents an implied premium of about 20 per cent to Santos Brasil's closing price of R12.71 on Friday and an implied multiple of 12.2 times trailing 12-month EV/Ebitda to the end of Q2 2024.
According to Standard & Poor's CapitalIQ platform, Santos Brasil had revenue of 2.5 billion rand ($453.7 million) and earnings before interest, tax, depreciation and amortization of 1.11 billion rand ($201 million) in the past 12 months to the end of June, with a profit margin of 43.7 percent.
Santos Brazil has issued 864 million shares with a market value of 10.9 billion rand ($1.98 billion) at a price of 12.71 rand per share.
Santos Brazil added that CMA CGM would begin the process of obtaining regulatory approval within the next two weeks and, if successful, expected to close the deal in the first quarter of next year.
In addition to the three container terminals, Santos Brasil operates a vehicle and liquid bulk terminal, as well as three logistics facilities.
"I am delighted that CMA CGM Group has reached a strategic agreement to acquire Santos Brasil," said Rodolphe Saade, Chief Executive Officer of CMA CGM Group. "This significant investment reflects our commitment to strengthening our partnership with Brazil and supporting its growth in the years ahead," he added.
The brightest star in Santos Brasil's portfolio is undoubtedly the Tecon Santos terminal, which CMA CGM claims is the largest container terminal in South America.
The operator has a long-term concession agreement with the Port Authority, valid until 2047, with an annual handling capacity of 2.5 million TEUs for three berths, with the potential to expand to 3 million TEUs in the near future, accommodating vessels up to 14,000 TEUs.
If approved by regulators, the deal would spell the end of Brazilian ownership of the Santo container terminals: Brasil Terminal Portuario is a 50-50 joint venture between APM Terminals, owned by Maersk, and TIL, owned by Mediterranean Shipping; Emabraport is now 100% owned by DP World; Libra Terminais was sold to Philippine terminal operator ICTSI for $195 million ina distressed asset sale in 2019.
However, CMA CGM said it was committed to continuing to operate the Port of Santos as a public user facility.
"These strategic facilities will continue to operate as multi-user terminals under the current management team and will continue to focus on improving service quality to meet customer expectations," the company said.
The company also added that the acquisition of Santos Brasil would consolidate its 2017 plan to acquire Brazilian coastal transport operator Mercosul, which it acquired from Hamburg South America when it was acquired by Maersk. In addition, CMA CGM, Maersk's Alianca and MSC's Log-In Logistica now dominate the Brazilian clocarketing market, which also demonstrates the increasing dominance of large shipping companies in Brazil. In October last year, Hapag-Lloyd also entered the field with the formation of a Norcoast 50:50 joint venture with local logistics firm Norsul.
"Cma CGM intends to further develop its routes to various terminals in Brazil and further improve its services to Brazilian exporters and importers in order to meet the growing demand and better meet the needs of consumers," the carrier added.
"The capacity expansion potential of Tecon Santos terminal and its operational excellence will provide useful support for improving service quality. To meet global demand, CMA CGM intends to accelerate its investment in the Santos Brasil terminal with the goal of increasing the combined capacity in the coming years to meet the commitments made by Santos Brasil to the port authorities.
"This strategic move will enable CMA CGM Ferries to provide seamless connectivity between Europe, Asia, North America and the Caribbean, consolidate Brazil's position as a key hub for the Group's global operations and strengthen synergies with the Mercosur shipping subsidiary," the company added.
