CMA CGM to sell Global Gateway South terminal for $817m cash

7/5/2017

CMA CGM has announced that it will offload a substantial stake in Port of Los Angeles' Global Gateway South terminal as part of its plan to dispose of certain terminal assets owned by Neptune Orient Line which it acquired last year.

The French shipping line said the deal would complete the financial deleveraging plan that was first announced in December 2015.

As part of the transaction, CMA CGM will sell a 90% stake in the terminal to EQT Infrastructure III and its partner firm P5 Infrastructure for an enterprise value of $875m.

Enterprise value measures a company's total value and is used as a more comprehensive alternative to equity market capitalisation.

"We are very pleased to partner with EQT Infrastructure. Together we will develop GGS into a world class terminal company. The terminal will remain an important part of our industry leading logistics network, and will have an opportunity to grow alongside CMA CGM. Throughout the sales process, EQT Infrastructure and P5 expertise have focused on growth in addition to a responsible, hands-on ownership approach, which we consider highly beneficial to our future partnership," said CMA CGM executive officer Farid Salem.

CMA CGM in turn will be paid a cash consideration of $817m and retain a 10% stake in the terminal.

Conditions of the deal will also entitle the company to extra deferred cash considerations, the amount and period, to be contingent on the terminal's operating and financial performance in the days ahead.

Additionally, the shipping line will continue to be a key preferred user of the terminal's facilities.

BNP Paribas and HSBC were financial advisers to the deal while Wilkie Farr & Gallagher was legal adviser for the transaction.

"The transaction is fully in line with CMA CGM’s strategy to focus on its shipping business while securing its operations through shared ownership of key terminals.
Closing of the transaction is subject to antitrust and regulatory approvals, including clearance from the Committee on Foreign Investment in the United States and is expected to occur by end of 2017," said CMA CGM.

In March this year, CMA CGM chief executive Rodolphe Saadé told Lloyd's List that he was considering a number of options for the LA terminal such as a partnership deal, with a full sale also likely.

Back then, the company was in talks with a number of interested parties over a stake sale for the terminal.

EQT is an alternative investments firm with approximately €37bn invested across 24 funds and owns companies across Europe Asia and the US.

“The acquisition of GGS fits perfectly with EQT Infrastructure’s focused sector approach of targeting high-quality, well-located logistics assets with transformation potential,” said EQT deputy managing partner Lennart Blecher. “The combination of P5’s and EQT’s vast industrial expertise will be a great foundation for sustainable value-creation for the terminal. We are also very happy with CMA CGM’s continued support and engagement.”

P5 Infrastructure is a port infrastructure investment company, which focuses on owning and operating port and port-related infrastructure.