China Merchants to buy port stakes for $406 mln

HONG KONG, Dec 15 (Reuters) China Merchants Holdings (International) Co. Ltd. has said it would buy stakes in a Shenzhen port for HK$3.17 billion (US$406 million), as the container port operator consolidates its position amid booming trade in China.

Booming international trade, fuelled mainly by China, has inflated asset value of container ports worldwide in the past three years as investors look for stable returns from terminals.

China Merchants said in a statement that it would buy a 17.5 percent stake in Shekou Container Terminals Ltd. (SCT 1) and a 17.15 percent stake in Shekou Container Terminals (Phase II) Co. Ltd. (SCT 2) from Hong Kong conglomerate Swire Pacific Ltd. .

China Merchants will also buy a 22.5 percent stake in SCT 1 and a 22.05 percent stake in SCT 2 from P&O Dover (Holdings) Ltd. It would then set up a 70 percent-owned joint venture with Modern Terminals Ltd. to hold the interest in SCT 1, SCT 2, and Shekou Container Terminals (Phase III) (SCT 3), and An Yun Jie Port and Warehouse Services (Shenzhen) Co. Ltd.

Modern Terminals is a wholly-owned subsidiary of Wharf (Holdings) Ltd. .

China Merchants said it would fund the deal in cash and by cash receivable from Modern Terminals.

SCT 1 operates berths No. 1 and 2 at Jetty III of the Shekou Container Terminals in Shenzhen, SCT 2 operates berths No. 3 and 4, and SCT 3 has berth no. 5, 6, 7, 8 and 9.

Trading in shares of China Merchants, which was suspended on Thursday, will resume on Friday.

Its shares have surged more than 70 percent so far this year, outpacing a 64 percent gain in the index of Chinese companies listed in Hong Kong <.hsi>.

REUTERS DKS PM0727