OOIL deal fuels already hot terminals market
A number of shipping companies with terminal assets saw share prices sharply rise after Orient Overseas (International) Ltd. Received a better-than-expected price for four North American terminals. Industry analysts suggest that some of the terminal companies might be convinced to cash in.
The Ontario Teachers' Pension Plan Board on Friday agreed to pay $2.35 billion to OOIL for TSI Terminal Systems Inc., which operates Deltaport and Vanterm in the Canadian Port of Vancouver, as well as New York Container Terminal on Staten Island, N.Y., and Global Terminal in Bayonne, N.J.
OOIL's four terminals had sales of $444.3 million on throughput in the 12 months ended June 30 of 2.57 million TEUs and initial estimates put the value of the portfolio at roughly half the final selling price, between $1.1 billion and $1.3 billion.
Citigroup analyst Charles de Trenck said that Neptune Orient Lines, controlled by Singapore government entity Temasek, could benefit from seeking joint venture partners for its terminal assets, which include U.S. West Coast operations in Long Beach, Oakland and Seattle.
'The quality of the assets is high and merits a revisit from management as to potential restructure. Targeting individual terminals such as Seattle for specific joint ventures could also add value and returns,' de Trenck said.
Denmark's A.P. Moller-Maersk Group owns APM Terminals with more than 40 container terminals spanning 24 countries. 'It looks as if the value attached to the terminals has received a huge shove upwards; $2.4 billion is a lot of money for four terminals, and APM has many more,' said Tue Ostergaard, analyst with Gudme Raaschou.
The OOIL-Ontario Teachers' deal highlights the growing interest from financial institutions and soaring value of port assets. Other significant recent port and terminals related transactions include:
* Earlier this month, New York-based, Macquarie Infrastructure Partners, an affiliate of Australia’s Macquarie Bank, agreed to pay about C$173 million ($153 million) for Halterm Ltd., operators of a 72-acre container terminal in Halifax, Nova Scotia.
* Also this month, British real estate, airport and port investment group Peel Holdings sold a stake in Peel Ports to RREEF Infrastructure, a subsidiary of Deutsche Bank, for a reported '700 million ($894 million) for 49 percent of the company.
* In September, Macquarie Bank agreed to pay about $870 million for 40 percent of Hanjin Shipping’s terminal assets in Taiwan, Japan and the United States.
* In July, Associated British Ports Holdings accepted a '2.8 billion ($5.1 billion) takeover offer from the Goldman Sachs-led consortium, Admiral Acquisitions UK Ltd.
* In April, Hong Kong's Hutchison Port Holdings, the world’s largest port operator, sold for $4.4 billion in cash a 20 percent shareholding to the number two ranked operator, PSA International, owned by the same company as NOL, Temasek.
* In March, state-owned Dubai Ports World acquired the global operations of London-based Peninsular and Oriental Steam Navigation Co. for $6.8 billion.
DP World said in a letter to U.S. lawmakers that it plans to accept final bids for the sale of its U.S. port operations and stevedoring businesses within two weeks, according to the Associated Press.
The Dubai-owned company agreed to divest its U.S. holdings following the purchase of P&O Ports in March after politicians tried to block the sale on national security grounds and fears that terrorists could access U.S. ports.
P&O Ports North America operates U.S. terminals and stevedoring services at 22 U.S. ports, including New York-New Jersey, Philadelphia, Baltimore, Miami and New Orleans.
Although final bids are due in two weeks, final selection of the winner is expected to take longer.
The letter did not identify the bidders, but said they were finalizing financial arrangements, the AP said.
Analysts and investors now believe that bids are likely to exceed DP World’s asking price of $700 million to $750 million.
DP World has committed to selling the U.S. operations to an 'unrelated U.S. buyer,' a factor that might limit the final price.