Now that a financial solution for the remediation of the bankrupt phosphorus factory Thermphos at Nieuwdorp is in sight, all the lights are on green for a merger of the port companies Zeeland Seaports and Ghent. This is according to an article in the PZC newspaper. The goal is to start operating as a combined port on January 1, 2018. The headquarters are located in Terneuzen in Zeeland.
This is evident in the merger agreement that both port companies will submit to their shareholders on Thursday. Because the State of the Netherlands is willing to help in the remediation of Thermphos, the last obstacle to a port merger has been eliminated. Senior executives of Zeeland Seaports and the Port of Ghent, Jan Lagasse and Daan Schalk, both emphasize that financially risky issues like Thermphos and the construction of the sea lock in Terneuzen should not prevent a merger from taking place.
Schalck: "This is a unique opportunity to take an economic step forward. It will generate the development of a port company with a value of about one billion euros that can grow faster than if the two port companies remain independent. It would be a great pity if this opportunity came to nothing because of a contribution of 27.7 million euros for Thermphos.''Ghent too faces a thorny financial problem. Ghent is contributing 89 million euros towards the construction of the second sea lock in Terneuzen. If construction unexpectedly turns out to be more expensive, the merger company will have to pick up the bill. Moreover, the risk is covered in such a way that Zeeland will not pay the bill for the sea lock or Ghent for Thermphos. Shareholders on both sides of the border are compensated for possible deficits in the form of preference dividends.
Personnel are retained
The merger agreement shows that cross-border cooperation is financially feasible. There is a robust port company with a stock value of around one billion euros. Both port companies are approximately equal in terms of capital so that the partners join forces on an equal basis. Also, the merger will not involve job losses. Previously, Jan Lagasse of Zeeland Seaports said that cross-border cooperation would require a lot of the staff. In addition, every employee is much needed. Jobs on either side of the border are guaranteed in a final agreement.
Lagasse and Schalck will remain general directors in the coming years. This has a practical advantage: one executive manager will not have to get to know hundreds of companies across the border.
The fact that both ports wished to explore the formation of a cross-border port company was announced last November at a Flemish-Dutch Summit attended by Prime Minister Mark Rutte and Flemish Prime Minister Geert Bourgeois. Politicians, industry and port experts embraced the idea, because the merger has positive consequences for the entire region.
In terms of maritime transshipment it will be the tenth largest port in Europe and the third in terms of added value. The merger company will consist of around 550 companies, many of which are multinationals. It is expected that they will benefit from the merger because it will be easier to combine (more) flows of cargo and collaborate in other areas. Port tariffs are likely to decrease because a merger company offers economies of scale and operates more efficiently (fewer overlaps). Moreover, the merger company is a ‘big boy’ internationally.
Growing faster together
As a bigger player, ZSP and Ghent expect to grow faster. By 2022, the added value will have increased by 10 percent. Maritime transshipment must rise from 62 to 70 million tons. For inland waterway transshipment, the target is 60 million tons compared to 55 million tons currently. The number of direct and indirect jobs will increase from 95,000 to 100,000. The merger company also wants this growth to be associated with innovation and sustainability. Growth is high on the agenda. However, Schalck says that jobs and added value are more important than tonnage.
Some companies, especially in the port of Vlissingen, are slightly nervous about a merger. They are concerned that Ghent will call the shots and that the emphasis will be on the canal area rather than on Vlissingen. According to the merger agreement, this fear is unfounded. With more than 48 percent, Ghent will be the biggest shareholder (the province of Zeeland receives 25 percent of the shares), but for major decisions a majority of 76 percent is required. That excludes a small majority coalition. Plus, as major shareholders, Ghent and the province of Zeeland retain their right to veto. The shares will be divided as follows: Ghent 48.52 percent, Zeeland 25 percent, the municipalities of Terneuzen 8.33, Borsele 8.33, Vlissingen 8.33, the province of East Flanders 1.44, and the municipalities of Evergem and Zelzate respectively 0.03 and 0.005 percent.
Headquarters in Terneuzen
The merger port will be a European company with its headquarters in Terneuzen. The company will be the holding company of the current two ports, each of whom retain their own property. This is about sites, buildings and infrastructure. This construction allows the merger to be reversed and the port companies to continue as two independent port companies. Both subsidiaries will continue to pay taxes within the holding company in the Netherlands and Belgium. A supervisory body will be compiled, similar to the current Supervisory Board at Zeeland Seaports.
Cross-border cooperation is not unique. Copenhagen-Malmö have already taken the step, but the scale is incomparable. According to Ghent and Zeeland Seaports, the merger is self-evident. They share the Ghent-Terneuzen Canal and in practice already work together, also commercially, and will both benefit from the second sea lock that is being built at Terneuzen.
The shareholders can examine the merger agreement over the next three months. This also applies to the employees’ representatives of the port companies. At this stage the intention is to announce the new name of the port company on December 8. Before cross-border cooperation can take place however, the Flemish Port Decree will have to be amended. The Flemish parliament is expected to vote on this in spring 2018. This will probably be a mere formality, so that the holding company of the merger can already be established on January 1, 2018.