China Merchants to pay HK$3.2 billion to merge Shekou terminals

China Merchants to pay HK$3.2 billion to merge Shekou terminals China's state-owned port and container manufacturing group China Merchants Holdings (International) Co. Ltd. Thursday agreed to pay a total of HK$3.17 billion ($408 million) to acquire the minority interests of Swire Pacific and DP World in Shekou Container Terminals, enabling it to merge the three terminal facilities into a single container terminal.
   DP World acquired the holdings in SCT1 (22.5 percent) and SCT2 (22.05 percent) as part of its acquisition of P&O Ports and will receive HK$1.78 billion ($229 million) in cash.
   'This adjustment rebalances our China portfolio in line with our strategic vision. We will reinvest the proceeds into assets that fit our long term plan to meet customer needs in the region going forward,' said DP World Senior Vice President and Managing Director Asia Pacific Peter Wong.
   Swire will gain HK$1.39 billion ($179 million) for its shares in SCT1 (17.5 percent) and SCT2 (17.5 percent). Swire hasn't commented on the deal.
   The transaction will raise China Merchants' stake in SCT1 from 50 percent to 90 percent and to 90.2 percent in SCT2, from 51 percent.
   Also, China Merchant will transfer its 100 percent interest in SCT3 into a joint venture with Modern Terminals Ltd — of which it owns 27.1 percent — called Mega SCT.
   China Merchant will initially own 70 percent of the joint venture, with Modern Terminals owning 30 percent after gradually injecting its 10 percent stake in SCTI and 9.8 percent holding in SCT2. Modern Terminals has the option to sell its interest in the joint venture to China Merchant for HK$3.96 billion ($509 million) one year after the transaction is completed, expected March 2007.
   'The post-transaction structure will provide the group with a solid operational platform to support and facilitate the group’s expansion in the container terminals business in the future,” China Merchant said.