Global Ports to acquire Russian port operator NCC

Acquisition agreement will create leading Baltic terminal operator, but deal is subject to regulatory approval
RUSSIA’s leading box port operator Global Ports Investments has entered into a binding agreement to acquire 100% of Russia’s number two operator NCC Group in a deal worth $1.6bn.
The deal will give GPI an estimated market share in Russia of just over 40% and combined volumes of 2.5m teu based on 2012 figures.

NCC will receive $291m in cash, an 18% share of GPI on a diluted basis, and GPI will take on $916m of NCC debt.
NCC’s key assets include 100% ownership of St Petersburg’s and Russia’s busiest terminal First Container Terminal, 80% ownership of the recently launched Ust-Luga Container Terminal in the port of Ust-Luga and 100% ownership of Logistika-Terminal, an inland container terminal located close to St Petersburg, which serves primarily as an inland container yard for First Container Terminal.

GPI already controls marine box ports Petrolesport (PLP) and Moby Dik and the inland terminal of Yanino in St Petersburg. In 2012, PLP, Moby Dik and FCT together handled 2.1m teu and St Petersburg is estimated to have handled 2.5m teu in total.
GPI will now have access to seven marine container terminals and two inland terminals.
GPI first announced it was in discussion with NCC in late May and at the time some contacts had expressed concerns that the deal would reduce competition. The deal also needs to gain regulatory approval in Russia, Ukraine and Cyprus.

The present deal does not include NCC’s terminal in Ilychevsk on the Black Sea.
Instead, GPI has a call option to acquire a 50% share of the terminal, which can be exercised within three years of the deal closing.
The deal gives NCC an enterprise value of 7.6 times adjusted earnings before interest, taxes, depreciation and amortisation, based on 2012 figures.
Shareholders reacted well to the news and at the time of writing, GPI’s share price had risen by 4.76% compared with yesterday’s close.
Last year, NCC reported revenues of $253.2m, down 20.2% on 2011, and an operating profit of $137.6m, down 37% year on year.
GPI’s revenues increased 0.1% in 2012 to $501.8m and EBITDA jumped 2% to $288m.