Royal Boskalis Westminster NV and SAAM SA have created a joint harbor towage operation in Brazil, Mexico, Canada and Panama. The intended partnership, which is between SMIT, a wholly owned subsidiary of Boskalis, and SAAM, a wholly owned subsidiary of Sociedad Matriz SAAM SA, was previously announced in September 2013 and all conditions to form the joint venture have now been fulfilled.
The combined companies will operate under the name SAAM SMIT Towage (SST). The partnership consists of two underlying joint ventures, with a fleet of 100 tugboats, operating in more than 30 port terminals in Brazil, Mexico, Canada and Panama. The total combined 2013 EBITDA of SST was US$100 million.
The merger will generate synergies estimated at approximately $10 million per year, to be fully captured in the next 24 months. Those synergies will mainly come from an increased fleet efficiency and cost savings, among others. As the operations are further integrated, sharing of best practices and market synergies are expected to generate additional value.
The geographic scope of the first joint venture covers the Brazilian towage market, where SMIT and SAAM already had operations. Boskalis and SAAM each hold a 50% share in this new joint venture. With a total of 42 tugboats, the combination is an important player in the growing market of Brazil, operating in major ports such as Rio Grande, Itajai, Santos and Salvador.
The second joint venture, in which SAAM holds a 51% majority stake, relates to the towage activities in Panama and Canada (SMIT) and Mexico (SAAM). The combination will operate a total number of 58 tugboats. This joint venture will have presence in main ports of Canada (Prince Rupert and Vancouver), Panama (Manzanillo, Balboa, Colon Container Terminal) and Mexico (Veracruz, Lazaro Cardenas, Altamira, Tuxpan).
The total value of the SMIT and SAAM assets that have been contributed to SST is comparable, and the joint venture has been formed without an equity contribution by either party.