COSCO to purchase majority stake in Piraeus port

China COSCO Holdings Company Ltd., which also owns container carrier COSCO and port terminal operator COSCO Pacific, has made an offer of $402 million for a 67 percent stake in the largest cargo port in Greece.    State-owned China COSCO Holdings Company Ltd. has made a “significantly improved” offer of 368.5 million euros ($402.1 million) to purchase a 67 percent stake of Piraeus Port Authority S.A., according to the Hellenic Republic Asset Development Fund, which handles Greek government asset sales.
   Greece agreed to the privatization of the government-owned port of Piraeus, the country’s largest cargo gateway, and the northern port of Thessaloniki as part of its latest bailout deal with the European Union.
   Last week, COSCO was the sole bidder for the Piraeus port, but HRADF countered its bid, asking for a higher cash offer. The improved offer, equal to €22 per share, represents a 41 percent premium to the current share price of PPA S.A, which closed yesterday’s trading session at €12.95 per share.
   The €368.5 million price tag for the port does not include mandatory investments amounting to €350 million over the next 10 years and expected revenues from the concession agreement for the Hellenic Republic of around €410 million.
   “During today’s meeting, HRADF’s Board of Directors accepted the improved offer tabled by Cosco Group (Hong Kong) Limited on the 20th of January 2015, in the context of the tender process for the obtaining of 67% stake of Piraeus Port Authority S.A. issued shares,” the state agency said in a statement.
   The purchase is seen as a logical move for COSCO, whose terminal operating arm COSCO Pacific already manages two container terminals at Piraeus under a 35-year concession it was granted in 2009. APM Terminals, a subsidiary of Danish shipping conglomerate AP Moller Maersk, said back in August it was interested in purchasing both Piraeus and Thessaloniki, but apparently declined to make an offer for PPA.
   Located a few miles south of the Greek capital of Athens, Piraeus is a major player in the Mediterranean thanks to its proximity to the Suez Canal. Many ocean carriers use the port as a transshipment hub for inland rail services and intra-European short sea loops to Northern Europe and the Black Sea.
   According to ocean carrier schedule and capacity database BlueWater Reporting, a total of 12 direct region-to-region liner services call at Piraeus. Six of those loops serve the Asia-Europe trade, five connect Mediterranean ports with North Europe, and one operates on the transatlantic trade calling at U.S. East Coast ports. Dedicated intra-Mediterranean and Mediterranean to Black Sea services are outside of BlueWater Reporting’s research scope and, therefore, are not included in this information.
   COSCO Container Lines, also a subsidiary of China COSCO, either provides vessels or purchases slots on six of the seven total services calling outside of Europe.
   COSCO and fellow state-owned shipping line China Shipping Container Lines (CSCL) in December released the details of a planned merger that would see CSCL essentially exit the container shipping business entirely. The combination would create the fourth largest ocean carrier worldwide with 288 containerships with around 1.6 million TEUs of capacity.
   The completion of the transaction is still subject to approval by the relevant authorities and the satisfaction of certain further conditions provided in the share purchase agreement, said HRADF. Morgan Stanley and Piraeus Bank acted as financial advisors, Freshfields Bruckhaus Deringer LLP and Alexiou – Kosmopoulos Firm acted as legal advisors, the Hamburg Port Consulting (HPC) and Marnet acted as technical advisors on behalf of HRADF in the negotiations.