CMA CGM will buy back the stake in the Port of Los Angeles container terminal it previously sold to help pay down debts from its $2.4 billion acquisition of NOL.
French shipping giant CMA CGM has announced an agreement to buy back its 90% stake in Los Angeles terminal Fenix Marine Services (FMS) in a deal that values the terminal at $2.3 billion, more than double the value from when CMA CGM last sold it in 2017.
The 90% stake is currently owned by EQT Infrastructure III and CMA CGM holds the other 10%.
CMA CGM sold the stake to EQT Infrastructure in a 2017 sale that had an enterprise value of $875 million after initially acquiring the terminal in 2016 as part of its acquisition of Singapore’s Neptune Orient Lines (NOL) for $2.4 billion.
The 2017 sale of the terminal, formerly known as Global Gateway South, had been planned as part of CMA CGM’s strategy to pay down debts from the NOL acquisition, which marked the largest acquisition in the Marseille-based group’s history, in addition to a broader strategy to focus on its shipping business.
EQT Infrastructure has reportedly invested more than $130 million in the terminal to upgrade equipment and technology. The sale comes as another EQT fund, EQT Exeter, completes the sale of a $6.8 billion industrial portfolio comprised of modern supply chain and e-commerce facilities in what is said to be one of the largest in U.S. history.
FMS is the third largest terminal in the Los Angeles/Long Beach port complex and one of the largest in North America, with a capacity of about 2.5 million TEUs. Following the closure, CMA CGM will become the sole owner of the facility.
CMA CGM says the new acquisition, which will be financed from its own resources, will strengthen its position as a global port terminal operator. The group currently has investments in 49 port terminals in 27 countries through its two subsidiaries CMA Terminals and Terminal Link, a joint venture.
“The rapid recovery of the global economy has demonstrated the importance of ports and logistics infrastructure,” said Rodolphe Saadé, Chairman and CEO of CMA CGM Group. “To effectively manage our port operations on the U.S. West Coast, we have decided to acquire Fenix Marine Services. Fenix Marine Services is one of the largest terminals in this country and one of its most strategic gateways.
It is a key industrial facility that will significantly strengthen our position and support our rapid growth in this market.”
Amid the container shipping craze, CMA CGM has seen its net profit soar nearly 3,000% in the first six months of this year to $5.5 billion. The group is also one of the leading ocean carriers on the transpacific routes, with 24 services.
The company says it also has major investments planned for the port in the coming years, including expanding the container yard to increase capacity “in a phased manner”; expanding the terminal’s rail capacity; building a new berth; and continuing the terminal’s digital transformation.
In early 2022, the FMS terminal will also welcome CMA CGM’s first 15,000 TEU LNG carriers to be deployed on Asia-US routes.
CMA CGM is the world’s third-largest liner operator with a market share of approximately 12%, behind Mediterranean Shipping Company (MSC) and leading carrier Maersk, according to Alphaliner.