According to reports, Titan Petrochemicals Group has completed the acquisition of a shipyard from its controlling shareholder. The transaction was priced at a significant valuation discount to other Chinese shipyards based on the current order book and expected future earnings, which suggests the injection should be very favorable to Titan. Part of the shipyard project – including the high-margin ship repair facility -is still at the development stage, however, which means the acquisition is not without risks. Acknowledging these risks, the payment has been structured to account for the fact that a lot of the earnings potential is based on what comes on stream in 2008-2010.
