CMA CGM invests up to $2.26Bn on Brazilian port group Santos Brasil

CMA CGM has paid US$1.12BN  to Opportunity Group SA for this share and is duty bound to follow up and buy the remaining 52% at the same share price ( Reais 15.30 (US$2.69) per share, higher than the closing price of Reais 12.71 on the Bovespa Sao Paulo Stock Exchange) “in the near future”, and probably early in the new year. The total cost will come to US$2.26Bn.

For more than 10 years, South America’s biggest container terminal outfit, which includes the largest terminal in Brazil, Tecon Santos with 1.8M TEU handled in 2023 for a 38% share of all Santos, has been courted by the world’s leading shipping lines including Maersk, MSC, Hutchison and China Merchants Port Holdings, among others – and finally one of its suitors has stepped forward and made a concrete bid.

As well as the flagship, 2.5M-TEU per annum capacity Tecon Santos terminal, CMA CGM will also get for its money TEV, a car terminal in Santos (also the biggest in Brazil); Tecon Imbituba general cargo facility in the south of Brazil; the fast growing Vila do Conde box terminal in the north of the country, close to the Amazonas region; a liquid bulk terminal in Itaqui, also North region; and a growing logistics subsidiary that will tie in with CEVA Logistics, which is also well established in Brazil, with a 7,500-strong workforce. CMA CGM already employs around  1,000 people in Brazil out of eight regional offices.

Since early 2018, the French carrier has had its own Brazilian flag cabotage operation via Mercosul Line, which it bought from Maersk. As it ramps up its Manaus and Amazonas business using the Vila do Conde terminal that serves the region via transhipment, especially during periods of drought, this facility could prove extremely valuable.

During the first seven months of this year, Tecon Santos increased its market share from 38% up to 41% of the 3.1M TEU handled up to end of July 2024. This was at the expense of BTP (a joint venture between regional rivals MSC and Maersk), whose share fell from 39% to 35% due to operational difficulties.

For the 12 months to 30 June 2024, Santos Brasil generated Reais 2.55Bn in revenue and EBITDA was Reais 1.28Bn.