Royal Boskalis Westminster is selling its stake in SAAM SMIT Towage in a deal valuing the company at over $500m.
From this perspective the market likes the disposal of the JV entity active in South America and Canada, the indicative price is also seen as attractive
Tijs Hollestelle of ING Financial Markets
The decision by Boskalis to sell its shareholding in the venture comes almost a decade after it took control of SMIT.
Boskalis and SAAM formed a joint venture in 2014 and have now reached a discussion it is beneficial for all for the company to have one owner, a statement said.
It explained the transaction came in response to a more competitive market environment and still required regulatory approval.
Macario Valdes, chief executive of SAAM, said the partnership with Boskalis had been very productive, with growth in Canada and a stronger position in Brazil.
"Today we want to take another step forward. Since the towage area is at the core of our business, SAAM can play an important role in consolidating and growing this industry,” he said.
SAAM will pay $201m in cash for control of the joint-venture, which gives SAAM SMIT Towage an enterprise value of $560m.
Boskalis will take an €200m impairment on the Harbor Towage joint venture in its full-year accounts to be released next month.
Shares in Boskalis inched up by just short of 1% in early trading after the deal was announced.
Towage and LNG export terminals are viewed non-core activities by the equity market, with Boskalis generating two thirds of its revenue from dredging and offshore energy, analysts explain.
“From this perspective the market likes the disposal of the JV entity active in South America and Canada, the indicative price is also seen as attractive,” Tijs Hollestelle of ING Financial Markets told TradeWinds.
“But Boskalis also announced a sizable impairment charge relating to this transaction this morning, due to weakening market conditions in South American ports, which is not liked by investors.
“All in all this combination explains in our view the moderately optimistic share price reaction.”
Exiting the Americas
Boskalis first moved for SMIT in 2008. While it backed out of the initial approach, Boskalis returned a year later to takeover the then listed company.
A spokesperson for Boskalis noted the towage business was not included in the first bid in 2008 but was taken over when the final deal was put in place in 2010.
He described the towage joint-venture as "not strategically essential" and the structure was not ideal.
Smit was a patchwork of different businesses when it was taken over by Boskalis.
Smit's former terminals, salvage and heavy lift activities remain under the Boskalis umbrella.
The European and Asian towage activity have also been retained, while the towage position in the Americas is now being divested.