Saudi Arabia’s new Mega port in the new desert Megacity

JEDDAH — A new mega port at Saudi Arabia’s King Abdullah Economic City (KAEC) aims to take business away from Dubai’s Jebel Ali by offering a quicker and cheaper service.

Officials behind the KAEC, one of four new cities approved by the late King Abdullah said freight destined for Riyadh will be shipped directly to the new King Abdullah Port in KAEC instead of Dubai where it currently goes.

“At the moment lots of products destined for Riyadh are shipped to Dubai, but that will change. They’ll be shipped here as it is cheaper – and can be delivered more quickly within the Kingdom,” said Rayan Bukhari, a manager at the King Abdullah port in comments published by the BBC.

At 70 square miles KAEC will eventually be a metropolis slightly larger than Washington DC.

“We aim to create one of the world’s largest ports,” he told the BBC, adding: “We’re not competing with Jeddah’s Islamic port – but we are going to take business away from Jebel Ali in Dubai. That’s because of our quicker, more automated offloading and customs procedure.”

King Abdullah Port is a full-service commercial port with a highly strategic location. The port will deliver world-class service by means of state-of-the-art computer systems and a highly experienced staff.

The first privately owned and funded port in the Kingdom of Saudi Arabia, the port is overseen by a single regulator – this is the foundation for a streamlined experience.

The emergence of China and India as major world economies has contributed to the Gulf region as an increasingly attractive hub. In fact, a recent report by global analyst EC Harris ranked the Mideast as most attractive in the world for port investment.

King Abdullah Port lies directly on the main Asia Europe trunk line. In fact, it can reduce East-West transhipment times by 5 to 7 days.

In addition to being on this major global trade route, King Abdullah Port is situated near the Kingdom of Saudi Arabia’s industrial and population centers. With this ideal location, it is being developed to increase the speed and efficiency of shipping.

Both the local regulators and the master developer of the port are working together to ensure that the port’s modern infrastructure, constant focus on innovation, commitment to customer service, and competitive regulations will encourage shipping lines to avoid major diversions and to rely on King Abdullah Port instead.

The King Abdullah Port is just part of the KAEC story. Encircling the port is the city’s Industrial Valley, while further afield are areas set aside for residential communities, tech clusters, universities and hospitals.

On the eastern side of the city will be its second major link to the outside world, the Haramain Station. When that is opened, the city will become one of four stops on Saudi Arabia’s latest high-speed rail network, linking the megaproject with Jeddah, Makkah and Madinah.

The government has set up an Economic Cities Authority overseeing all four megacities and dealing with every license, construction permit and approval needed from different ministries.

So far only 15 percent of the city has been developed – industrial estates, residential districts and public facilities are currently under construction.

SG 23.3.2015

Cement: Mega-merger in doubt as Holcim changes tack

Switzerland’s Holcim called a halt on Monday to its merger with Lafarge , pressing the French company to renegotiate the deal terms and putting their plan to create the world’s biggest cement maker at risk.
The deal was presented as a marriage of equals in April 2014, although the terms meant Holcim shareholders would end up with 53 percent of the combined company.
Since then, diverging performances both in terms of company results and share prices, exacerbated by a surge in the Swiss franc against the euro after the Swiss central bank abandoned a currency cap, have strengthened Holcim’s position.

The Swiss company’s largest shareholder has been pressing for a revision of the agreement for some time and now the board has stated the deal will not happen without a renegotiation, both of the price and management positions.
“The Holcim board of directors has concluded that the combination agreement can no longer be pursued in its present form,” Holcim said in a statement, saying it was ready to talk about the share exchange ratio and “governance issues”.

Lafarge was given an equal number of board seats in the new company and its Chief Executive Bruno Lafont was to be its head with Holcim boss Wolfgang Reitzle remaining chairman.
A person familiar with the situation said Holcim no longer accepted that Lafont should head the new company, while a top 10 Holcim shareholder said seven seats each on the board was no longer deemed a fair split.
Lafarge said in a separate statement it would consider revising the share exchange ratio, but nothing else. A second person familiar with the situation said the French group still wanted to get the deal done but not at any cost.
“Lafarge’s board of directors remains committed to the project that it intends to see implemented,” Lafarge said.
In a sign that the matter could become political, a source in France’s Socialist government said it wanted to ensure that any group that emerged would retain roots in France.
“The government is keeping a close watch on this matter and making sure that the deal maintains a solid base and decision-making centres in France,” the source told Reuters.
Bernstein Research said the two boards had both taken “tough negotiating positions” with some flexibility on the share ratio, but little on the governance issues.
“For us, this leaves the issue of an adjustment or break-up wide open,” the analysts wrote.

MARRIAGE OF EQUALS?

According to the person familiar with the situation, Holcim has proposed changing the agreed one-for-one share exchange ratio to 0.875 Holcim shares for each Lafarge share, but the French company wants a 0.93 to 1 ratio.
“There are more announcements and more posturing to be made by the respective shareholders. This will no doubt be a volatile time because we have to wait a few weeks before we have a general meeting where the shareholders have to vote,” said Sandra Crowl, a member of the investment committee at Carmignac Gestion which owns Holcim shares.
“We thought that 1-to-1 was favourable for Holcim and if it stays at that level we’re still favourable,” she said. “We’re very bullish for a joint company going forward and we expect it to be market leader in the industry.”
At 1450 GMT, Lafarge shares were trading down 5 percent at 61.75 euros, nearly 13 percent below their implied value under the original deal terms and roughly 1.5 percent above their value under an exchange ratio of 0.875.
Holcim was down 1 percent at 74.7 Swiss francs.
The cement saga is reminiscent of the ill-fated Publicis-Omnicom alliance last year which foundered after Publicis accused its larger rival of a power grab ahead of the closing.
Nearly a year after trumpeting a merger of equals the advertising agencies walked away from the deal amid disagreements over the company structure and management roles.
The differences between Holcim and Lafarge came to a head during the transition period in which they were seeking antitrust approvals globally and selling off assets to comply with various regulators’ requests. Approvals for the deal are still needed in India, the United States and Canada.
Shareholders of both companies still have to ratify the deal and some on the Holcim side had been agitating for change, including investor Thomas Schmidheiny who owns a 20 percent stake.
On Feb. 2, Holcim and Lafarge agreed to sell a chunk of their European businesses to Irish group CRH to secure approval for the merger from European Union competition authorities.
CRH shares fell 4 percent on Monday as concerns mounted that its acquisition would fall victim to the Lafarge-Holcim differences. The French and Swiss firms must pay CRH a break-up fee of 157.8 million euros if they walk away from the sale.

Reuters 16.3.2015