China Merchants Holdings (International) (0144) is set to acquire container terminals, toll-road and land assets in Shenzhen from its parent to strengthen its foothold in the south.Shares of China Merchants were suspended from trading Wednesday, pending a statement on a proposed transaction involving a share issue by the company, the company said in a statement to the Hong Kong stock exchange.A source said China Merchants would buy the Mawan container terminal and toll road assets from its parent through a cash and shares payment.
"The acquisition fits China Merchants' strategy as it already holds a major market share in Shenzhen west terminals," the source added.Company officials declined to comment on the suspension of shares.China Merchants operates terminals in Shenzhen, Hong Kong, Shekou and the Shenzhen Mawan facilities. Shenzhen Chiwan Wharf, Shenzhen Haixing, Swire Pacific (0019), and P&O Asia also operate terminals at Shekou.China Merchants raised its investment in Shenzhen's Mawan terminal by 50 percent to 600 million yuan (HK$593.88 million) earlier this year.
The Hong Kong-based company operates two berths at Mawan terminal in a joint venture with Shenzhen Nanyou Group.Overall throughput at ports run by China Merchants almost doubled in 2005 to 24.49 million 20-foot equivalent units from 12.75 million TEUs in 2004.Growth in volume at the company's main operations, in Shekou slowed to 18.6 percent last year from more than 43 percent in 2004.The 2004 growth was boosted by five new berths at Shekou Container Terminal, Mawan Port, and Chiwan Container Terminal.Growth rate at the combined Shekou operations will slow this year "as the throughput base is larger than before," chairman and managing director Fu Yuning said.China Merchants hopes to use Shenzhen as its southern base amid fierce competition from Hong Kong- based rivals such as Hutchison Whampoa (0013) and COSCO Pacific (1199), which have invested heavily in Shenzhen.Hutchison holds a majority stake in Yantian, another Shenzhen port, while COSCO Pacific is building new facilities at Nansha, Guotai Junan Securities analyst Alan Lam said.Shares of China Merchants closed unchanged at HK$24.7 on Tuesday.