China Merchants Port Holdings Co. Ltd. acquires 90% stake of Brazil's second largest port

By Curious

Yesterday, during the 2017 BRICs Summit, China Merchants Port Holdings Company Limited (CMPort) announced that the Group has entered into the share purchase agreement with TCP Participações S.A.(TCP) and the selling shareholders through the Group's wholly-owned subsidiary Kong Rise Development Limited. In which, CMPort will acquire 90% Stake of the Port of Paranaguá in Brazil, from TCP with the purchase price of R$2,891,250,227.92 (equivalent to approximately HK$7,228million).

China Merchants Port Holdings Co. Ltd. acquires 90% stake of Brazil's second largest port

Under the witness of Mr. Mauricio Quintella, Minister of Transportation Ports and Civil Aviation and Dr. Hu Jianhua, Vice Chairman of CMPort and the Executive Vice President of China Merchants Group Limited(‘CMG’), Mr. Li Yadong, General Manager General Office of CMG, the share purchase agreement was signed by Dr. Bai Jingtao, the Managing Director of CMPort and Mr. Luiz Antonio Rodrigues Alves, CEO of TCP. Other participants include Mr. Jorge Bastos, General Director of ANTT-National Terrestrial Transport Agency, Mr. Lu Yongxin, Deputy General Manager of CMPort, Mr. Zhou Qinghong, General Manager of SCCT and SCT, Ms. Natalie Wan, Director of Overseas Development Department of CMPort etc.

TCP and its subsidiaries are principally engaged in operating the container terminal concession in the Port of Paranaguá. Located in a sheltered bay that allows excellent navigating conditions with 24 hours access, and is the second largest container terminal in Brazil with currently a design capacity of 1.5 million TEUs each year which will be further increased to 2.4 million TEUs each year upon completion of the planned expansion which is currently expecting to commence work later this year and expected to complete by the second half of 2019. Also, TCP Log (a wholly-owned subsidiary of TCP) offers door-to-port integrated logistics, with the focus on offering tailor made logistic solutions for importers and exporters.

The acquisition of TCP will allow CMPort to further perfect its overseas global port network. In spite of the existing ports in Southern Asia, Africa, North America and Europe, the Group can further expand its business to the Latin America region through the existing acquisition. Furthermore, the investment will provide the Group with opportunities to make use of the marine transportation hub of TCP to develop its logistics network, export/import and industrial zone and potential residential projects and related financial service platforms, allowing for greater commercial synergies within the Group.

The purchase price was determined on a locked box basis with reference to the financial condition of TCP as of 30 September 2016.The total purchase price under the Share Purchase Agreement will be funded by a combination of internal resources of the Group and external debt financing. Based on the audited financial statements of TCP as at 30 June 2017, the total assets of TCP amounted to approximately HK$8,042 million.

Dr. Hu Jianhua reiterated the Group's spotlight on Brazil: “Brazil is the largest economy in Latin America with huge market potential and abundant resources and reserves. Brazil is also a member of the BRICS group of nations and is China's most important comprehensive strategic partner and trade counterpart in Latin America. The transaction serves CMG's intention to promote commercial cooperation with the BRICS countries and the ‘China Brazil Joint Action Plan’.” The transaction will help us achieve our commercial objectives, and at the same time, enhance the trade development between Brazil and China and the comprehensive strategic cooperation relationship of the two countries.”

Dr. Bai Jingtao said, “TCP is not only CMPort's cornerstone to enter Brazil, but also the future hub of the rising commodity and goods trade flow between Brazil and China. CMPort will also leverage its international port operation experience and local connectivity to help TCP continue its success story as one of the leading ports in Brazil and Latin America.”

Dr. Bai added:“This landmark acquisition demonstrates CMPort's confidence in the Brazilian economy and its commitment to contribute to the development of the country's infrastructure and the increased flow of business between BRICS countries.”

About TCP:

TCP is located on the southeast coast of Paraná of Brazil, not only known as the second largest Container Terminal of the Country, but also the only container gateway of the region. The major economic hinterland located on the southeast coast of Brazil, in which it gathers 45% of the Brazil population and 48% of the country’s GDP. The existing port is -12.3 meters deep with a quay length of 879. It also has 3 Container Berths and 33 Hectares of depot with a capacity of 1.5million TEUs, the capacity is expected to increase to 2.4million TEUs after further expansion. The throughput volume of TCP in 2015 and 2016 are 0.82 and 0.76million respectively. The special concession right of TCP will be completed in year 2048.

Source: CMPort