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CMA CGM has said it will pursue more acquisitions despite the spectre of higher taxes on large companies in its home market, as the French shipping group announced a $1.1bn investment in a Brazilian port terminal operator.
Cash-rich CMA CGM, the world’s third-biggest shipping group, has been expanding into new areas such as logistics and media, and on Monday said it had agreed to acquire a 48 per cent stake in Santos Brasil, with a view to ultimately taking over the group.
The deal follows a period of strong growth for CMA CGM, which has made it a target for politicians in France including the far right. Marine Le Pen’s Rassemblement National party had campaigned to end tax breaks for maritime shipping groups in the run-up to France’s recent elections, while newly installed Prime Minister Michel Barnier has opened the door to levies on large companies to try to redress ailing public finances.
Rodolphe Saadé, chief executive of Marseille-based CMA CGM, said the group still needed to pursue long-term growth and would pay windfall levies in France if it had to.
“We’re a family business, we’re looking at the long term,” Saadé told reporters after the Brazilian deal. CMA CGM will buy an initial stake in Santos Brasil, whose assets include South America’s largest container terminal in the port of Santos, before later launching a tender offer for the remaining shares, in a transaction worth more than $2bn in total.
“I understand there are political difficulties in France but our goal is the future, it’s investment long term,” he added. “If the government decides there will be an exceptional contribution to be made from big companies (in France), we’ll take our share.”
He warned, however, that any change to a so-called tonnage tax in France would be punitive, as CMA CGM’s rivals in Denmark and Switzerland enjoyed a similar favourable regime.
“If France went for that, it would put us at a disadvantage compared to our European rivals,” Saadé said.
The system, based on taxing the net tonnage of a fleet of vessels, helps protect maritime companies in volatile times when demand shrinks but is advantageous as it is usually lower than corporate tax rates.
Saadé said his goal for CMA CGM was to “continue to grow the company”, including through acquisitions when the chance arose. The group branched further into media with the purchase of the BFM TV channel this year, cementing Saadé’s new status as one of France’s billionaire players in the sector. Logistics has also become a greater part of the group’s portfolio and earnings.
Under the Brazilian deal, CMA CGM will gain access to three container port terminals as well as other assets.
Freight prices have come down from the highs during the Covid-19 pandemic that proved a bonanza for shipping groups, though blockages on Red Sea routes this year have sustained rates and demand has proved strong.
Saadé warned that 2025 was likely to be a tougher year for the sector as more ship orders were delivered, creating extra capacity that might not be filled.
“2025 will be more complicated, but not because the world economy is slowing,” he said.