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A South African court on October 9 temporarily blocked the deal between International Container Terminal Services, Inc and Transnet for the development of Durban Container Terminal Pier 2 in the Port of Durban
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Transnet in July 2023 declared ICTSI as the preferred bidder for the 25-year joint venture to develop and operate DCT 2
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Losing bidder APM Terminals challenged the Transnet decision, claiming the solvency evaluation of ICTSI was irregular
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ICTSI said it will pursue its legal rights while Transet said it is evaluating its options
A South African court on October 9 temporarily blocked the deal between International Container Terminal Services, Inc (ICTSI) and Transnet SOC Ltd for the development of Durban Container Terminal (DCT) Pier 2 in the Port of Durban.
State-run Transnet in July 2023 declared ICTSI as the preferred bidder for the 25-year joint venture to develop and operate DCT 2. Transnet owns South Africa’s railway, ports and pipelines infrastructure.
Losing bidder APM Terminals, a subsidiary of Danish shipping giant Maersk, however, challenged the Transnet decision in court, claiming the solvency evaluation of ICTSI was irregular, which should have disqualified the Philippine-based company from the tender selection process.
The Kwazulu Natal Division of the High Court of South Africa ruled in favor of APM Terminals and issued an injunction against Transnet’s selection of ICTSI as operating partner. The court found “potentially flawed and … unfair to the other bidders” Transnet’s decision to award ICTSI the deal.
APM Terminals claims its bid, about R2 billion (US$114 million) less than ICTSI’s offer, should have afforded it the right to negotiate the contract with Transnet.
The judge has issued the injunction until the case is heard and resolved.
According to the court, the ICTSI bid included a commitment of US$618 million (approximately R11.1 billion) for a minority shareholding in a special purpose vehicle, while APM’s lower bid was deemed insufficient.
In a regulatory disclosure dated October 10, the publicly-listed ICTSI said it “will continue to pursue its legal rights.”
The Durban concession was seen to have been ICTSI’s largest operation in Africa, with DCT 2 expected to handle 2.8 million twenty-equivalent units from the current 2.1 million TEUs.
ICTSI already manages four terminals in Africa: Onne Multipurpose Terminal in Nigeria, Kribi Multipurpose Terminal in Cameroon, Matadi Gateway Terminal in D.R. Congo, and Madagascar International Container Terminal.
Evaluating options
For its part, Transnet on Oct 9 said it was evaluating its options following the court ruling.
In a statement, Transnet said it “is committed to concluding the transaction expeditiously in the interest of economic growth and development.”
DCT Pier 2 is Transnet’s largest container terminal. It handles 72% of the port’s throughput and 46% of South Africa’s port traffic.
