French shipping giant CMA CGM is looking to acquire port terminal operator Santos Brasil in a US$2 billion deal that will further strengthen its position in Brazil and grow its South American operations.
The planned acquisition will give CMA CGM—the third-biggest container shipping line in the world in terms of total ships and TEU capacity—control of the largest container terminal in South America. Following the completion of the deal for the 47.6% stake, the company will then initiate a takeover to acquire the remaining shares.
Santos Brasil operates five terminals in Brazil, one of which is Tecon Santos, the largest shipping terminal in South America. Tecon Santos manages approximately 2.5 million containers each year and can increase capacity to 3 million. Additionally, it has three berths that can accommodate ships carrying up to 14,000 twenty-foot-equivalent units (TEU).
"I am pleased that the CMA CGM Group has concluded this strategic agreement for the acquisition of Santos Brasil, which operates five terminals in Brazil, including the largest container terminal in the Port of Santos, handling 40% of Brazilian volumes, as well as a logistics company," said Rodolphe Saadé, CEO of CMA CGM Group.
"This significant investment reflects our commitment to strengthening our partnership with Brazil and supporting its growth in the coming years," he added.
CMA CGM said in a statement that Santos Brasil manages a portfolio of eight assets on the Brazilian coast, including three container terminals, a vehicle terminal, a liquid bulk terminal and three logistics facilities.
These assets are located in the Ports of Santos, Imbituba, Vila do Conde, Itaqui and in Sao Paulo.
Over the 12 months ending June 30, the company generated BRL 2,549 million in revenues (US$458 million) and BRL 1,284 million in EBITDA (US$230 million).
"The acquisition of Santos Brasil marks another significant milestone in CMA CGM’s global port development strategy, reinforcing its position as a leading global multi-user terminal operator with investments in approximately 60 terminals worldwide," the French shipping giant said.
CMA CGM noted that it intends to further develop its line calls in the various Brazilian terminals and further improve its offering to Brazilian exporters and importers, thereby responding to increasing demand and better addressing consumer needs.
The expansion potential of Tecon Santos terminal capacity and its operational excellence will be useful in enhancing service quality.
"To meet global demand, CMA CGM intends to accelerate investments in Santos Brasil terminals, with an objective to increase the combined capacity in the coming years, in line with the commitments undertaken by Santos Brasil with port authorities," it said.
CMA CGM added that these strategic facilities will continue to operate as multi-user terminals under the leadership of the current management team and will continue to focus on improving the quality of their services to satisfy their customers' expectations.
The CMA CGM Group has been operating in Brazil for over 20 years, with currently eight offices and over 10,000 staff members.
CMA CGM also acquired Mercosul Line from the Danish conglomerate Maersk in December 2017 expanding its presence in Brazil.
"This strategic move will enable CMA CGM to offer seamless connections between Europe, Asia, North America, and the Caribbean, solidifying Brazil's position as a key hub in the group's worldwide operations and reinforcing synergies with MERCOSUL Line affiliate," the shipping line said.
CMA CGM said the transaction with Opportunity Funds is expected to close in the first quarter of 2025, subject to regulatory approvals from relevant Brazilian authorities.
Following the completion of the acquisition, CMA CGM will launch a mandatory tender offer on all other Santos Brasil shares on the same terms, in line with Brazilian market rules.