MIP to buy Long Beach Container Terminal for USD 1.78bn

30 April 2019 - 12:00 am UTC

A consortium led by Macquarie Infrastructure Partners has agreed to buy California’s Long Beach Container Terminal from Oriental Overseas (International) Ltd. for USD 1.78bn.

Long Beach Container Terminal Inc and a unit of Hong Kong-based Orient Overseas have entered into a sale and purchase agreement with the buyer, according to an Orient Overseas statement today (30 April). As part of the deal, company unit OOCL will agree a container stevedoring and terminal services pact with LBCT for a 20-year period.

The seller’s key considerations were not only pricing but also who would use and operate the facility, given Orient Overseas’ long-term commitment to the fully-automated port, a company spokesperson told Inframation.

The fact that Macquarie has a track record of financing and operating a number of US port assets could also bode well for the terminal’s future, the spokesperson added.

A key part of the negotiations was also about the rates to be charged by the terminal operator in the 20-year stevedoring and terminal services agreement between OOCL and MIP, the spokesperson said. “We are happy with the rates.”

The transaction, which is pending regulatory and shareholder approvals, is likely to be completed by the end of the first half of 2019.

“The price is better than we expected,” said Spencer Fan, a sector analyst with Guotai Junan.

The price of USD 1.78bn would translate to a 5.2 multiple of net book value (NBV), Jefferies analyst Andrew Lee wrote in a note to investors. He expects Orient Overseas to issue a special dividend because he said the sale would result in a net gain of USD 1.29bn for the company. LBCT had an NBV of USD 345.2m as of the end of last year, according to the report.

In January, this news service identified five parties that were participating in the process: Seaspan Corporation, Yilport, EQT Infrastructure, Stonepeak Infrastructure Partners and Macquarie Infrastructure & Real Assets, which controls MIP.

MIP Chief Executive Karl Kuchel said he is committed to LBCT’s expansion by 2022, which will significantly increase the terminal’s capacity.

“We are pleased to acquire LBCT, a premier terminal in the largest port complex in North America, which serves as a gateway for trans-Pacific trade,” he was cited as saying in the Orient Overseas statement.

In July 2018, Shanghai-based COSCO Shipping signed a National Security Agreement with US authorities committing to sell LBCT to an unrelated third party, in order to clear the final hurdle for its USD 6.3bn acquisition of Orient Overseas.

Orient Overseas will continue to own Kaohsiung Container Terminal in Taiwan. The company does not rule out strategic terminal purchases globally. It has not confirmed plans on how it will use the sales proceeds, the spokesperson said.JP Morgan acted as the sell-side financial advisor while Slaughter and May is the legal counsel to OOCL.

 

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