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Wednesday, December 8, 2021

CMA CGM to Buy Los Angeles' FMS Container Terminal

Maritime Activity Reports, Inc.

November 3, 2021

(Photo: Fenix Marine Services)

(Photo: Fenix Marine Services)

Shipping group CMA CGM has agreed to acquire the Fenix Marine Services (FMS) container terminal at the port of Los Angeles in a deal worth around $2 billion that will extend its presence in a crucial hub for transpacific trade.

CMA CGM currently has a 10% stake in FMS and it is to buy the remaining 90% from investment fund EQT Infrastructure III on the basis of an enterprise value of $2.3 billion, CMA CGM and EQT said on Wednesday.

France-based CMA CGM, one of the world's largest container shipping lines, expects to pay out around $1.8 billion for the 90% stake and will finance the deal from its own funds, it added.

Los Angeles port handles massive freight volumes between China and the United States and has been caught up in mounting shipping congestion as the coronavirus pandemic has disrupted global supply and demand for goods.

FMS is the third-largest container terminal at Los Angeles and its takeover will add to 49 terminals in which CMA CGM already has investments worldwide, it said.

"The swift recovery of the global economy has demonstrated the importance of ports and logistics infrastructure," Rodolphe Saadé, chairman and CEO of CMA CGM, said in a statement.

"It (FMS) is a key industrial facility which will significantly strengthen our position and support our rapid growth in this market."

CMA CGM will act as terminal operator for FMS and plans to invest in expanding the capacity of the site, notably by building a new ship berth, extending the container yard and increasing rail capacity for onward transport.

Like its shipping rivals, CMA CGM has extended its presence along the logistics chain in port infrastructure and non-maritime transport services.

Its earnings have jumped this year as the pandemic has led to high freight rates and saturated vessel capacity.

The acquisition of FMS, which is subject to regulatory approval, marks a return to CMA CGM ownership of the terminal that it had sold to EQT in 2017.

CMA CGM divested then a 90% stake for an enterprise value of $875 million as it looked to boost its finances following its acquisition of Singapore-based shipping line NOL.

The enterprise value of $2.3 billion in the new deal represents 13.7 times FMS' expected earnings before interest, tax, depreciation and amortization (EBITDA) in 2022, according to CMA CGM.


(Reporting by Gus Trompiz Editing by Sudip Kar-Gupta and Mark Potter)

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