Royal Boskalis Westminster N.V. (Boskalis) and KOTUG International B.V. (KOTUG) have reached agreement on the merger of their European harbour towage operations. The Memorandum of Understanding signed by the parties in late 2014 has now been formalized following a thorough process.
The combined operations will be transferred to a 50/50 joint venture bringing together the European harbour towage activities of SMIT, a Boskalis subsidiary, and KOTUG. The operations will continue under the name KOTUG SMIT Towage.
Peter Berdowski, CEO of Boskalis, "This joint venture is an important next step in the implementation of our harbour towage strategy aimed at concentrating and expanding our harbour towage services in regional partnerships. We have already generated substantial value and experience with this type of partnership at Smit Lamnalco, Keppel Smit Towage and SAAM SMIT Towage. By joining forces in northwestern Europe we will be able to provide even better and more efficient services to our clients."
The scope of the joint venture will encompass the harbour towage operations of SMIT in Belgium, the Netherlands and the United Kingdom, as well as the harbour towage operations of KOTUG in Germany, the Netherlands and the UK.
The merger will create a leading provider of harbour towage services in northwestern Europe. The joint venture will serve 11 ports in four countries with a fleet of 65 tugboats. The total combined revenue is approximately EUR 150 million and benefits of the joint venture will include operational synergies.
The financial close will take place in the first quarter of 2016, followed by the operational integration. The financial close will free up around EUR 90 million in cash for Boskalis, primarily as a result of refinancing the operations.