Malaysian utilities and infrastructure group MMC has signed a conditional share sale and purchase agreement to buy a 49% stake in Malaysia's Penang Port for MYR200m ($49.5m) in cash from MMC’s own majority shareholder Seaport Terminal (Johore).
With the deal, MMC reportedly intends to consolidate its port business and register it on the Malaysian stock exchange by the end of next year.
The terms of the deal include the condition that requires Penang Port to sell its loss-making ferry service business, which includes vessels, employees, costs, and liabilities.
The acquisition is expected to be completed by the first quarter of next year.
Following the completion of the deal, Seaport Terminal will hold a 51.76% ownership stake in Penang Port.
MMC was quoted by Nikkei as saying: "The proposed acquisition is in line with the initiative of the MMC to make further strategic investments in one of MMC's core businesses and to strengthen the MMC's financial performance and position.”
Considered as the third largest port by container throughput volume, Penang Port handles over 1.2 million twenty-foot equivalent units (TEU) of containers, which accounts for 5.6% of the total containers in Malaysia.
Currently, the port is carrying out an initiative to make it more competitive and profitable, reported Deal Street Asia.
The initiative includes cutting operating costs, increasing port efficiency, offering more cargo handling services, as well as development of port infrastructure as per the industry demand.
MMC currently operates container port Pelabuhan Tanjung Pelepas located in southern state of Johor and Northport in the central Selangor state in Malaysia.