Mergers and acquisitions (M&A) activity in the port sector has been growing, with recent M&As indicating the sector is consolidating, reports a maritime research consultancy.

Drewry has pointed to the planned merger of the ports of Antwerp and Zeebrugge, 2019’s agreement between COSCO SHIPPING Ports, Tianjin Port Holdings and China Merchants International Terminals to merge their Tianjin container terminal assets, 2020’s acquisition of Yingkou Port by Liaoning Port Company and 2020’s acquisition of Krishnapatnam Ports Company Ltd (KPCL) by Adani Ports and Special Economic Zones (APSEZ).

“A merger of Belgium’s two largest port authorities will have positive cost implications,” said Drewry.

The combined port will rank a close second to Europe’s largest container hub, Rotterdam. As part of a joint plan, the two ports have defined three strategic priorities – sustainable growth, resilience and leadership in energy and digital transition. After the completion of the deal, the city of Antwerp will own 80% of the new company, with the city of Bruges controlling the remaining 20% share.

Emerging global trend

This planned merger adds to an emerging global trend, said Drewry. Referencing the 2019, COSCO-Tianjin-China Merchants deal, the consultancy said the planned regionalisation of ports (region-wise consolidation) in China aims to rationalise capacity planning and reduce damaging competition between neighbouring ports.

China now has nine ports in the global top 25, compared to 11 two years ago. Another deal delivered as part of China’s regionalisation strategy was the July 2020 US$2.39bn acquisition of Yingkou Port by Liaoning Port Company (previously known as Dalian Port Company).

Strategically the deal is focussed on strengthening Liaoning Port’s status as a major gateway port in northeast China. Figures from China’s Ministry of Transport show Port of Dalian has registered an annual decline of 41.7% in volumes to adjust the overstatement of throughput in 2020 as well as volumes shifting to nearby Yingkou Port. Liaoning Port Company’s acquisition of Yingkou Port should help balance-out some of these inter-regional shifts in throughput, said Drewry.

APSEZ acquisition

In another deal, Adani Ports and Special Economic Zones (APSEZ) acquired a controlling stake of 75% in Krishnapatnam Ports Company Ltd (KPCL) for USD 1.6bn. The acquisition of the multi-cargo facility port should accelerate APSEZ towards 500m metric tonnes per annum by 2025 and is another step in implementing the company’s stated strategy of achieving cargo parity between west and east coasts of India. This acquisition complements Adani’s existing investments in Ennore and Kattupalli, strengthening its market position and control.

Despite increased M&A activity, valuation remained below the long-term average, showcasing the possible acquisition opportunities, said Drewry.