Zeeland Seaports and Port of Ghent merge as of January 1, 2018
The green light was given for a merger between the Port Authorities Zeeland Seaports and the Port of Ghent, according to local newspaper the PZC. The goal is to move forward as a combined port as of January 1st 2018. The headquarters will be located in Terneuzen, Zeeland.
This becomes apparent in the merger agreement to be presented to their shareholders by both port authorities on Thursday. Previously the remediation of the bankrupt phosphor plant Thermphos was an obstacle, but since the Dutch government has agreed to financially support the remediation that last obstacle for the fusion has been removed. Both CEO’s from Zeeland Seaports and Port of Ghent, Jan Lagasse and Daan Schalck, emphasize that processes carrying a larger financial risk, such as Thermphos and the construction of the new seaport in Terneuzen, should not stand in the way of a merger.
The majority of the SDR-companies is settled in the Zeeland Seaport and Gent ports. Although the consequences for them from this merger are not clear yet, it is thought they too will profit from this merger on the long run.
'Unique opportunity’ says Schalck
We are presented with a unique opportunity to take a step forward. A port authority arises valued at roughly one billion euro, which can continue to grow beyond what the two independent port authorities could. It would be a shame if this opportunity would be stopped in its tracks due to a 27.7 million euro contribution for Thermphos.
There is also a complex dossier on the Ghent side. Ghent is contributing 89 million euro towards building the second seaport in Terneuzen. If the build unexpectedly becomes more expensive, the fusion company must contribute. It was, however, arranged that Zeeland will not be presented with the bill for the construction of the seaport and Gent will not pay for Thermphos. Shareholders on both sides of the border will be compensated through a preferential dividend for any financial drawbacks.
From the merger agreement it is apparent that this marriage is viable. A robust port authority will arise with a share value of roughly one billion euro. The current port authorities are of comparable value, so both partners enter this marriage on equal foot. Additionally the merger will not lead to a loss of jobs. Previously CEO Jan Lagasse from Zeeland Seaports has mentioned that this merger will required a lot from the staff. Every employee is needed. Jobs on both sides of the border are guaranteed in the final agreement.
Lagasse and Schalck will both remain CEO in the coming years. This has a practical advantage: one CEO does not need to familiarize himself with hundreds of companies on the other side of the border.
That both ports were considering this cross-border merger, was announced last November during the Flemish-Dutch summit where prime minister Mark Rutte and the Flemish prime-minister Geert Bourgeois were in attendance. Both politicians, the business world and port experts embraced the plan, also because the merge has a positive influence on the entire region.
In terms of sea transshipment it will be the tenth port of Europe and the third where it comes to added value. The fusion company consists of approximately 550 companies, including a large number of multinationals. The expectation is that they will profit from this merger, as it will be easier to combine (more) cargo flows and collaborate in other areas. The port tariffs can most likely be lowered slightly as the merger offers scale advantages and can work more efficiently (less overlap). Internationally speaking the merger company will become a major player. Lagasse and Schalck expect this will attract large companies.
Growing further together
As a leading player ZSP and Ghent expect to grow faster. By 2022 the added value must be raised by 10 percent. The transshipment by sea must rise from 62 million to 70 million ton. For inland transshipment the aim is 60 million ton. This is now 55 million. The number of direct and indirect positions will increase from 95.000 to 100.000. The merger company would also like to see the growth is paired with innovation and sustainability. Sustainability is high on the agenda. Schalck has mentioned however, he adheres less to quantity over jobs and added value.
A certain trepidation concerning this merger exists within some companies, mostly Vlissingen harbor. They are weary that Ghent will become a larger shareholder in the Chanel-zone and that they will have more to say than Vlissingen. According to the merger agreement, this fear is unfounded. Ghent, with 48 percent, will be a major shareholder (the province of Zeeland will hold 25 percent of the shares), for the larger decisions a majority of 76 percent is needed. That excludes a coalition by a small majority. Additionally the major shareholders, Gent and the Province of Zeeland, will retain their veto-right. The shares will be distributed as follows: Ghent 48.52 percent, Zeeland 25 percent, the municipalities Terneuzen 8.33, Borsele 8.33, Vlissingen 8.33, the province of East-Flanders 1.44, the municipalities Evergem and Zelzate respectively 0.03 and 0.005 percent.
Headquarters in Terneuzen
The merger port will be a European partnership, with Terneuzen as its headquarters. The partnership will be the holding of the current two ports, who retain their own holdings. This concerns the locations, buildings and infrastructure. This construction makes it possible to reverse the merger when and if the two wish to continue their operations independently. Both subsidiaries will continue to pay taxes within their holdings to the Netherlands and Belgium. There will be a supervisory board, comparable to the current advisory board at Zeeland Seaports.
This cross-border marriage is not unique. Copenhagen-Malmö has done this already, but is incomparable in scale. According to Ghent and Zeeland Seaports this merger is obvious. They share the Gent-Terneuzen Channel-Zone and on a practical level collaborate already, also commercially. They will also both profit from the second seaport being constructed in Terneuzen.
The shareholders can review the details of the merger during the next three months, as can the personnel representatives from both companies. As of yet it is the intention to announce the port authorities new name on December 8th. For this merger the Flemish port decree must be adapted. The Flemish parliament is expected to vote on this in the spring of 2018. This is most likely a formality, so the holding of the merger company can be founded on January 1, 2018.