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HUTCHISON Port Holdings will spend CNY270.63 million (US$36.03 million) to raise its equity in Shenzhen Yantian West Port Terminals Ltd to 65 per cent, up from its present holding of 41.7 per cent, according to a filing made to the Shenzhen Stock Exchange.
Shenzhen Yantian West Port Terminals is adjacent to its Yantian International Container Terminals, owned by HPH through its affiliate Hutchison Ports Yantian Ltd. The deal will reduce the stake of joint venture partner Shenzhen Yantian Port Holdings to 35 per cent from 58.3 per cent.
The move follows a plan by APM Terminals, the terminal operating arm of AP Moeller Maersk, to expand in the Pearl River.
APM Terminals agreed in June to take a 51 per cent interest in the Dachan Bay Phase 2 box terminal planned for Shenzhen. Earlier, in December, APM Terminals acquired 20 per cent of the second phase of the Nansha container port in Guangzhou.
A Wall Street Journal report noted that this deal underpins an unprecedented level of merger and acquisition activity in the container port industry over the past 18 months, particularly as the major players scramble to gain a piece of the action in south China.
Neil Davidson, a research director at Drewry Shipping Consultants of London, said: "Never before have so many major deals been seen in such a short space of time, and never at such high valuations. In North America alone, 10 major deals with a total value of over US$8 billion were transacted."
Shenzhen's container terminals were the world's fourth busiest last year, handling 17.4 million TEU, according to Drewry. Shenzhen Yantian West Port Terminals posted a net profit in 2006 of CNY6.59 million.
The report noted that the rise of neighbouring terminals in the Pearl River Delta is eating into Hong Kong's share of container trade from the region due to Hong Kong's higher costs and because mainland ports are closer to production centres.
It said it cost about $250 more to ship an FEU out of Hong Kong than from Yantian or other mainland terminals.
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