Chinese Shipping Giant to Purchase Majority Stake of Greek Port
Chinese shipping giant Cosco is consolidating its hold over Greek port of Piraeus as the company agreed to pay 368 million euros for a 67 percent stake in the country’s largest harbor, after they increased their offer to clinch control over a major thoroughfare in Europe. Based on a report of Athens based Hellenic Republic asset Development Fund, Cosco is paying 22 euros a share for the stake in Piraeus and was asked to submit a better offer last week after emerging as the sole candidate bidding for purchase stakes in Piraeus, in which Greek officials said was disappointing.
The offer accepted was at 70 percent premium to the closing share price of Piraeus Port of 12.95 euros valuing the entire business ar 550 million euros. The HRADF placed the whole value of the the agreement will come up to 1.5 billion euros if taking into account of purchase price, investments, dividends and income from the agreement. The result will provide Greek Prime Minister Alexis Tsipras with breathing space as he battles domestic opposition from state assets sales and trying to push through changes to pensions that would prompt strikes. Last week, government officials did its out most to ensure Greece will get the best possible price for a majority stake in Piraeus, a key port to China’s plans in creating a modern commercial empire that brings Chinese goods all throughout the continent.
The Chinese state owned and Hong Kong listed Cosco is the only confirmed bidder for the 67 percent stake in Piraeus, where Cosco is already running container operations in its two piers namely APM Terminals that is owned by Danish AP Moller-Maersk A/S and the Philippines-based operator International Container Terminal Services Inc. were also in the bidding process but dropped out at the last minute. The Chinese investment in Piraeus will be a key part of the One Belt, One Road policy of China that envisions creating a 21st century land and maritime equivalent of the Silk Road. Ever since the Chinese Shipping giant started container operations in 2009, traffic in Piraeus surged making the port one of the fastest growing ports in the world.
The transaction will be done in two steps, first Cosco will buy 51 percent stake in Piraeus fro 280 million euros then acquires the remaining stake in the next five years for 88 million euros upon completion of the terms in the shareholder agreement. Greece retains 23 percent stake in the company dropping down 7 percent on conclusion of the two step deal.