On 7 November 2016, Zeeland Seaports (the Netherlands) and Port of Ghent (Flanders) announced that they were exploring a possible merger.
The two port authorities are now jointly presenting a balanced merger agreement to their shareholders and works councils, setting out how the merger will be given shape on the basis of equality. Over the next three months, they will return their verdict on the merger between the two port authorities.
Merger announced last year in the presence of Rutte and Bourgeois
The announcement of the merger talks was made on 7 November 2016 at the Flemish-Dutch summit, in the presence of the Dutch Prime Minister Mark Rutte and the Flemish Prime Minister Geert Bourgeois. Politicians, businesses and port experts were immediately enthusiastic about the announcement at the time, not least because it would have positive consequences for the entire region.
Thorough financial and legal studies carried out
After several months of financial, legal and other studies, at the end of June the shareholders and works councils of both port authorities were presented with the outline of a possible merger in the form of a merger protocol. In the summer months, the outline accord was worked up into a merger agreement, articles of association and a shareholders' agreement. Next week, the two port authorities will present these proposals to their shareholders. It is expected that they will put them on the agendas of their municipal and provincial executives in October and November.
Robust basis for merger based on equality
The starting point for the merger agreement is to achieve a merger on a fully equal basis (50%-50%) and thus create a single cross-border port area and a single new unified port authority. In the valuation of the merger partners, all interests were taken into account, with good and workable solutions being found to some tricky and complex issues. This has resulted in a good and robust basis for the start of the joint merged entity, which will have a value in shares of around €1 billion.
Port authorities to be subsidiaries of a European company
The merger partners propose that the cross-border merged port should take the form of a European company as a holding company for the two existing port authorities, Port of Ghent and Zeeland Seaports. The purpose of this is to underline the international character of the merged entity and to ensure that the legal status of neither country will prevail. The European company form also allows for optimum configuration of the new governance and guarantees employee participation.
The two companies will exchange their own shares for those of the European company. In this way, the port authorities will retain their own assets (land, buildings and infrastructure) as subsidiaries of this European company. The subsidiaries will also remain responsible for public tasks such as the maintenance of roads in the port area, directing nautical traffic and safety in the port. Based on the principle of equality, after the merger the shares will be divided as follows: Zeeland province 25%, Borsele 8.33%, Terneuzen 8.33%, Vlissingen 8.33%, Ghent 48.52%, Evergem 0.03%, Zelzate 0.005%, East Flanders province 1.444%.
76% majority required for important decisions
It is proposed that all important decisions by the shareholders will require a 76% majority. This means that the shareholders will always have to seek a broad consensus and support, and that coalitions between very small numbers of shareholders will not be possible. Moreover, the major shareholders on both sides of the border (Zeeland province and the city of Ghent) will retain a de facto right of veto.
Job security following merger
The basic principle is that staff will remain employed by the subsidiaries of the holding company, Port of Ghent and Zeeland Seaports, and will have job security. There will be no redundancies as a result of the merger. The current employment conditions will also remain in force. This is clearly stated in the merger agreement and has been agreed with the works councils.
Corporate headquarters in the Netherlands, taxes also to be paid in Belgium
The corporate headquarters of the European company will be in the Netherlands. The European company will also have an office in the future port authority building on Graslei in Ghent. Since both port authorities will legally continue to exist, each port authority will pay tax in its own country.
Unified governance with due regard for shareholders' interests
The structure presented to the shareholders will be led jointly by two people, with the two current CEOs together heading up the new company. The European company and the two subsidiaries will have unified governance and management. A new supervisory body of limited size with four Dutch and four Flemish representatives will replace the existing supervisory board of Zeeland Seaports and the executive board of the Port of Ghent. The supervisory body will consist of at least four independent members (non-active politicians).
The merged company attaches great importance to direct contacts with its public shareholders. That is why there will be a shareholders' committee with all the representatives of the municipal councils, councils and executives and provincial councils. In addition, there will be ongoing and bilateral consultations with the shareholders.
Extra growth in added value, goods transhipment and employment
The new port will immediately assume a leading position within Europe: it will be the number 3 in terms of added value and number 10 in terms of goods transhipment by maritime shipping. This will help to increase the brand familiarity of the port region and of the companies. By 2022, the merged company aims to be a leading brand among international ports in order to attract investors. The future port authority building on Graslei in the heart of Ghent will help to establish its international profile.
The business plan is focused on sustained growth. The merged company is seeking to increase added value by 10% by 2022. It wants to grow transhipment by maritime shipping from 62 million tons today to 70 million tons. The target for transhipment to/from inland navigation is 60 million tonnes (currently 55 million tonnes). As a result of the growth in added value, volume and turnover, it is expected that employment in the new port zone will increase to 100,000 jobs by 2022 (direct and indirect; currently 95,000). In establishing the new companies, the focus will be on highly sustainable employment and added value per ton. The merger offers more opportunities for innovation and sustainability.
Merger brings benefits for firms
The merger offers opportunities to cut operational costs – as a result of efficiency, economies of scale and the avoidance of overlapping activities. These savings will result in a more competitive port authority, with the benefits also accruing to firms as a result of lower rates or slower increases in rates. In addition, the increased scale will result in more opportunities for combining cargo flows. The scale of the merged company will also lead to increased specialisation of employees and thus to the provision of better and more specialised services to the firms in the port area. By maintaining offices at various locations and establishing a business advisory board, the 'short lines of communication' so prized by firms will be guaranteed.
All signals for merger set to green
As regards the hoped-for merger, all signals for Zeeland Seaports and the Port of Ghent are now set to green. Especially now that the Samsom committee has issued a clear recommendation enabling a solution to be found for securing and cleaning the contaminated Thermphos site in Vlissingen. And particularly now that the contractor and the cost of constructing the New Lock in Terneuzen are known. The Flemish Parliament is expected to vote on the Flemish port decree, which will need to be amended in order to facilitate the merger, in the spring of 2018.
Following the approval of the merger agreement by the eight municipal and provincial authorities, the new name of the unified cross-border port area and the merged company will be announced. This is provisionally planned for Friday 8 December.
Read the article online at: https://www.drybulkmagazine.com/ports-terminals/07092017/port-of-ghent-and-zeeland-seaports-present-merger-agreement-to-shareholders/