Home » Maritime » Aboitiz Group sells transport business to Nenaco for P4.6B

NEGROS Navigation Co (Nenaco) acquired the country’s biggest local shipping company, Aboitiz Transport System (ATS), for about P4.6 billion, more than a year after its first buyout attempt fell through.

Last week, Nenaco and Aboitiz Equity Ventures and Aboitiz and Co (ACO) – majority owners of ATS – formally sealed the sale agreement in Shanghai. The deal is expected to be completed by the middle of January 2011.

Under the agreement, Nenaco will acquire up to 100% of the outstanding common shares of ATS and commence a tender offer in the Philippines for all such common shares, for the peso equivalent at closing of $105 million apportioned in cash for each ATS share (approximately P4.6 billion).

Included in the sale are ATS brand names "SuperFerry", "SuperCat", and "Cebu Ferries", and the movement of cargoes operating under the brand name "2GO".

Excluded in the transaction is ATS’s interest in its joint venture companies with the Jebsen Group of Norway, which are engaged in ship management, manning and crew management and bulk transport.

"The divestment of ATS was a very difficult decision to make considering the Aboitiz Group has been in the transport business for over 100 years. The Board of Directors, however, felt the Nenaco offer was reasonable and representative of ATS' value. Reinvestment of the sale proceeds in other identified areas will greatly enhance shareholder value over the long term," said AEV president & CEO Erramon I. Aboitiz.

"With a strong balance sheet, the joint team is confident that the increased resources of the combined company will enable us to provide innovative services, enhanced frequency and improved customer care to our valued passengers and freight, logistics and supply chain customers," Nenaco chair and chief executive Sulficio Tagud, Jr said in a statement.

If the deal pushes through, Nenaco will have to make a tender offer for all of the ATSC's shares owned by the public, at the same purchase price to be paid by AEV and ACO, at about $0.043 per share (or P1.80).

Nenaco will finance the acquisition with funds from China-ASEAN Marine BV Incorporated in the Netherlands, a wholly owned subsidiary of China-ASEAN Investment Cooperation Fund (CAF).

CAF is a private equity fund sponsored by the China Export-Import Bank. CAF targets investment opportunities in the 10 ASEAN countries, focusing on infrastructure, energy and natural resources.

"We are very pleased to transfer the ownership of ATS to Nenaco and its principal shareholders, the Chinese-ASEAN Investment Cooperation Fund, who share the same long term vision we have for the company and appreciate the need for industry consolidation and collaboration to improve efficiencies and lower transport costs," said Aboitiz.

After the buyout, Nenaco will likely follow a strategy it laid out when it first tried – but failed – to acquire ATS. In 2009 it may be recalled that Nenaco's parent firm KGLI-NM Holdings Inc, a company owned by Kuwaiti Gulf Link Investments, offered to buy the Aboitiz family's transport business. However, the deal fell through after the Kuwaiti group's finances were strained by the financial crisis.

A status quo will be observed with both firms operating separately but with several refinements such as sharing facilities in ports.

The combined Nenaco-ATS entity will have 31 vessels.

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