Titan moves away from container business to buy Fujian shipyard

INTEGRATED oil logistics provider Titan Petrochemicals Group Limited has announced it has reached an agreement to buy the Titan Quanzhou Shipyard Limited for US$170 million.

The acquisition is in line with Titan's stated strategy of transforming its business away from the volatile very large containership business and towards an integrated oil logistics to "increase stability in earnings", said a company statement.

The shipyard, capable of handling 100,000-tonners, is located in Douwei area of Huian, Quanzhou, the southern part of Meizhou Bay's economic zone and features a 2.6 km natural deep water coastline. The yard will be equipped with four large docks and will rank among the largest ship repair yards in Asia.

The deal involved US$57 million in cash and US$113 million in shares, US$29 million of which is subject to a three-year earn-out arrangement.

Titan Quanzhou Shipyard is a multi-functional facility focused on ship repair, shipbuilding and offshore engineering. The yard commenced operations in 2006 and the first ship was launched in August 2007.

Titan Quanzhou Shipyard currently has a strong order book of 22 vessels, amounting to approximately US$210 million. Construction of the ship repair and offshore engineering yards started in December 2006 and all three businesses are expected to be fully operational by the end of 2009.

Titan CEO Barry Cheung said: "This transaction will further transform the composition of Titan's earnings base to a well-balanced and diversified portfolio, enabling us to create sustainable value for our shareholders going forward."