China Merchants Holdings (International) Ltd. (CMHI) has recently formed a Hong Kong-incorporated joint venture company between the company, COSCO Pacific Ltd. (COSCO Pacific) and China Shipping Terminal Development (Hong Kong) Ltd. (China Shipping Terminal) and agreed to acquire, for a consideration of US$ 135 million, a 30% equity stake in Kao Ming Terminal, Kaohsiung from Yang Ming Marine, pursuant to a share sale and purchase agreement signed.
The consideration is determined based on the valuation assessed by an independent professional valuer. Each party of the Tripartite JV will ultimately hold a 10% effective stake in Kao Ming Terminal.
Upon completion of the acquisition, Kao Ming Terminal will be owned as to 60% by Yang Ming Marine, 30% by the Tripartite JV, and 10% by Ports American Group. The SPA is pending approval from the relevant governmental authorities of the PRC and the Investment Commission of the Ministry of Economic Affairs of Taiwan.
Kao Ming Terminal, which is Phase One of ‘Port of Kaohsiung’s Intercontinental Container Terminal’ in Taiwan and for which Yang Ming Marine has been granted a 50-year concession right to develop and operate at a total investment cost of approximately NT$180 billion (approximately US$620 million), has four 100,000-tonne berths, occupying a total area of 748,000 sq m on a quay length of 1,500 meters and a shore depth of -16.5 meters.
Development plan for this Phase One project was split into two stages: Stage One which entailed two berths on a quay length of 960 meters with an annual handling capacity of 1.4 million TEUs already commenced operation in January 2011. Throughput handled approximates 1.08 million TEUs in its first year of operation. Stage two for the remaining two berths, for which construction started in 2012, is expected to be operational by 2014, by which time the annual capacity of Kao Ming Terminal will increase to 2.8 million TEUs.
The Port of Kaohsiung, within which Kao Ming Terminal is located, is Taiwan’s largest port as well as Taiwan’s gateway. In 2011, the Port’s container throughput accounted for approximately 70% of the Taiwan market. The Port of Kaohsiung is Taiwan’s busiest transshipment hub port, encompassing the best natural shore depth condition and state-of-the-art equipment.
Kao Ming Terminal is the only terminal that can accommodate vessels of 14,000-TEU or over at the Port of Kaohsiung, and its fully-automated rail-mounted gantry crane operation offers highly efficient loading and unloading of containers. The Tripartite JV partners are confident in the terminal’s prospects and development potential, citing its strong competitive advantage in terms of shore depth and infrastructure quality.
This co-operation between CMHI, COSCO Pacific, China Shipping Terminal, each of which together with their respective parent companies possesses solid background and abundant resources in the areas of terminal operations, international shipping and logistics, thus combines forces amongst the strongest.
China Merchants Group Limited, CMHI’s parent company, is a large century-old Chinese enterprise well-rooted in Hong Kong with intensive experiences in ports, roads, energy transportation and logistics operations. COSCO Pacific’s parent company, China Ocean Shipping (Group) Company, is China’s largest and the world’s second-largest shipping enterprise, as well as a Fortune Global 500 company, commanding ocean routes covering 1,500 ports in more than 160 countries and regions.
China Shipping Terminal’s parent company, China Shipping (Group) Corporation, is a large conglomerate primarily focusing on shipping business with multinational, cross-industry, cross-regional and cross-ownership operations including, amongst others, maritime transport, port and logistics, industrial manufacturing, finance and investment.
CMHI firmly believes that the profound industry background of each of the joint venture partners and their respective parent companies has laid a good foundation for the future development of Kao Ming Terminal into a regional hub port. Moreover, the cooperation between the Tripartite JV partners and Yang Ming Marine will serve as a platform to not only further strengthen the strategic cooperation among the parties concerned, but also access more opportunities for cooperation from which to derive mutual benefit and achieve win-win results that will contribute to the growth and development of all parties involved.
In addition, this acquisition represents the first port and infrastructure project availed to enterprises with Mainland parentage. The investment in Kao Ming Terminal by CMHI, COSCO Pacific and China Shipping Terminal fully demonstrates their confidence in the economic and trade cooperation potential cross-strait among the three locations (Hong Kong, Taiwan and the Mainland).
Furthermore, this investment sets a success model for co-operation between enterprises from respectively Hong Kong and Taiwan, whilst reflecting a far-reaching and significant influence in the future for the closer economic and trade ties between, and for the friendly development for, Hong Kong, Taiwan and the Mainland.