Global Ports Investments Plc, a Russian seaport owner, agreed to buy NCC Group Ltd. for $652 million in cash and shares to create the largest operator of container terminals in Central and Eastern Europe.
The deal will give Global Ports three more container terminals near St. Petersburg, including Russia’s largest, and boost throughput to 2.52 million twenty-foot equivalent units, or TEU, the company said today in a presentation its website.
Russia’s container market expanded 9 percent last year, outperforming western Europe and the BRIC countries, which includes Brazil, India and China, according to Global Ports. Global Ports, which has six container terminals in the Baltic Sea and Russia’s Far East and has about 30 percent of the domestic market, said the share of cargo shipped in containers in Russia remains comparatively low.
“The lack of container assets in Russia justifies a premium that Global Ports paid,” Denis Vorchik, an analyst at UralSib Capital, which has a buy recommendation on the stock, said by phone. “The company will gain a dominant position in Russia’s Baltic basin.”
Global Ports rose 2.9 percent to $10.80 apiece by 11:50 a.m. in London, heading for the biggest gain in two months on a closing basis. The stock has fallen 34 percent from this year’s high on Feb. 5.
Global Ports will pay $291 million in cash and issue $361 million of new shares, giving NCC an 18 percent stake, according to a company statement. It will also take on $916 million of NCC’s debt, it said. The deal gives NCC an enterprise value of 7.6 times earnings before interest, taxes, depreciation and amortization for 2012. Global Ports is traded at about 7 times Ebitda, according to UralSib Capital’s data.
The acquisition will boost Global Ports’ Ebitda by 57 percent to a combined $452 million, widening its Ebitda margin to 60 percent from 57 percent, according to the company. Net debt to Ebitda will rise to 3.2 times from less than 1.
Global Ports plans to borrow $300 million from international banks in western Europe to fund the deal, Chief Executive Officer Alexander Nazarchuk said in a telephone interview, without naming them.
The company will maintain its policy of paying at least 30 percent of profit in dividends even with the higher debt load, he said. Global Ports plans to reduce capital spending as NCC’s available capacity will “accommodate growth for years to come,” the company said in a presentation.
“We see a significant future for Russia’s container market,” Andrei Kobzar, a co-owner of NCC, said by e-mail. “So we decided to take more than half of the NCC price in Global Ports shares.”