China Merchants Port Holdings (CM Port) will pay R$2.9b (US$925m) for a 90% stake in TCP Participações, which manages Brazilian terminal Terminal de Contêineres de Paranaguá, one of Brazil’s largest terminals and logistics company TCP Log.
The agreement marks the first investment by CM Port in Latin America and one of the the biggest transactions ever announced in the container terminal sector in the region, valuing 100% of TCP’s shares at R$3.2bn (US$1bn).
Dr Bai Jingtao, managing director of CMPort, said: “CM Port has rapidly expanded its overseas presence and understands that the entry into Latin America, especially Brazil, is crucial for the global expansion of its terminal network.
“TCP is not only China Merchants’ cornerstone to enter Brazil, but also the future hub of the rising commodity and goods trade flow between Brazil and China.”
As per the agreement, CM Port will acquire the 50% stake owned by Advent International and a 40% stake owned by the founding shareholders of TCP – Galigrain, Grup Maritim TCB, Pattac, Soifer and TUC.
Advent, Galigrain and TCB will sell all of their shares in TCP, while Pattac, Soifer and TUC will together retain a 10% stake in the company.
TCP’s facility has an annual capacity of 1.5m teu and ongoing expansion that will increase this to 2.4m teu by 2019.
Located in the port of Paranaguá in Paraná State, the terminal is one of the main hubs for the import and export of cargo in Brazil, moving approximately 10% of all the containers handled in the country.
Goods handled by TCP include frozen meat, a segment in which the company is the market leader with the largest number of refrigerated containers in the country; wood; components for the auto industry; chemicals; and electronic equipment.
Luiz Antonio Alves, current CEO of TCP, will remain in his current role, where he has overseen the facility’s capacity expansion from 800,000 teu in 2011 to 1.5m teu today with average productivity increasing from below 30 to 90 moves per hour.
The closing of the transaction is subject to regulatory approval from Brazil’s antitrust authority and is expected to be completed by the end of 2017.