Boskalis set to sell SAAM Smit stake for US$201M

A joint venture owning more than 100 tugs is to be broken up so that both parties can concentrate on future growth.

Royal Boskalis Westminster (Boskalis) has signed an agreement with Chile-headquartered Sociedad Matriz SAAM to sell its equity stake in SAAM Smit Towage for US$201M.

SAAM has agreed to end the joint venture and gain 100% of tug operations the partnership has in Brazil, Mexico, Panama and Canada. This comes as SAAM Smit Towage encounters tougher market conditions, growing competition in Brazil and new towage opportunities in Canada.

SAAM will acquire 49% of the business in Mexico, Panama and Canada and 50% in Brazil. In aggregate, these operations reported revenue of US$205M in 2018 and the enterprise value of SAAM Smit Towage is US$560M.

The joint venture was formed in 2014 and has expanded its presence in Latin America and into Canada. Boskalis said it has “realised efficiency savings and commercial synergies” but the partners have discussed how to “most effectively respond to the more competitive market environment”.

In October 2018, SAAM Smit Towage Brasil chief executive Pieter van Stein told Tug Technology & Business that there was greater “market turbulence” in Brazilian towage partially because of two new competing tug operators. “This does not sustain any heavy investments in new tugs for the moment,” he said at that time.

This month, both parties in SAAM Smit Towage concluded that an outright sale of Boskalis' share to SAAM would be most beneficial for both parties.

SAAM Smit Towage:

• Partners: Royal Boskalis Westminster, Sociedad Matriz SAAM
• Owns: 106 tugs
• Operates: Brazil, Canada, Mexico, Panama 
• Enterprise value: US$560M
• Ports: 30 in 4 countries
• Important terminals: Santos (Brazil) and Colón and Balboa (Panama)

SAAM chief executive Macario Valdés said it was time to “take another step forward” in his company’s growth and operations as towage is a core area of its business,

“The partnership with Boskalis has been very productive,” he said. “In just over four years, we have grown the business in Canada and improved our position in Brazil.”

He expects SAAM can use the cash injection to “play an important role in consolidating and growing this industry” as SAAM already operates in 60 ports in the Americas.

“We perform over 100,000 towage manoeuvres each year. Every five minutes we begin a new manoeuvre somewhere in the Americas. This is a business we want to strengthen and develop for the future,” Mr Valdés commented.

Boskalis expects its full year 2018 results, which will be reported on 7 March, will include an impairment on its interests in its harbour towage joint ventures of around €200M (US$226M). This includes the reported impairment from the first half year and the effects of this transaction.

Boskalis operates a global marine towage and salvage vessel fleet and has strategic partnerships in harbour towage and terminal services, including Kotug Smit Towage, Keppel Smit Towage, SAAM Smit Towage and Smit Lamnalco.

SAAM Smit Towage operates a fleet of 106 tugs, operating in 30 ports in four countries, including three of the five most important terminals in the Americas: Santos (Brazil) and Colón and Balboa (Panama).

This fleet is being expanded through acquiring newbuildings to support LNG terminal operations in Canada, while four tugs have been added to the Brazilian fleet in the last two years.

• LNG-proof tug launched for Canadian terminal
• New tugs expand South American towage fleets
• SST expands North American fleet through acquisition

After acquiring Boskalis’ equity stake, SAAM will operate a fleet of 153 tugs and operate in nine countries in the Americas.

This purchase still needs regulatory approval, but is expected to conclude in Q2 2019.

Emissions and engineroom technology will be discussed at Riviera Maritime Media's Americas Sulphur Cap 2020 Conference in Houston, in March.