Tuesday, August 26, 2014

Drewry: M&A activity heats up in U.S. container terminal sector

Merger and acquisitions in the U.S. container terminal sector is at its peak since the mid-2000s, reports the latest issue of Container Insight from Drewry Maritime Research, although the reasons for pursuing these deals have changed.

The U.S. container terminal sector has seen numerous high profile deals so far this year, and Drewry cites several examples. Brookfield Asset Management bought APM Terminals' Port Elizabeth at the Port of New York/New Jersey, and also stakes in MOL's TraPac terminals in Los Angeles and Oakland. K Line sold a stake in its Long Beach ITS Terminal to Ports America. And Goldman Sachs sold a 49 percent stake in SSA Marine to a Mexican entrepreneur.

Drewry says the financial players are the same type of buyers that were most active in U.S. terminals investments in the mid-2000s. The current buying spree, however, is spurred by lower acquisition prices, the EBITDA per box, and the fact that the U.S. is a low risk, stable place to invest, researchers say. In addition, automation is gaining momentum at U.S. terminals, which results in lower labor costs and higher capital investments.

The analysts note that the recent increase in U.S. M&A activity has also been triggered by continuing financial pressure on carriers and the fact that investors that put money into terminals in the mid-2000s are at the stage where they're ready to pull out as funds reach maturity.

Drewry predicts U.S. terminals will remain a hot M&A target and that more deals will likely be seen in coming months.

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