Mazagon Dock acquires controlling stake in Colombo Dockyard for $53
Mazagon Dock Shipbuilders Ltd, India’s biggest warship builder, has acquired a controlling 51 per cent stake in Colombo Dockyard PLC, in an all-cash deal for about $53 million. This is the first instance of an Indian shipyard, both state-owned and private, acquiring a shipyard overseas. The deal will also give Mazagon Dock access to a full-fledged engineering workshop that Colombo Dockyard is building at Hambantota International Port owned by Hambantota International Port Group (Private) Ltd, a unit of China’s state-owned China Merchants Ports Group. It will extend the service footprint of Colombo Dockyard to the southernmost tip of Sri Lanka.
The workshop strengthens the service availability and speed of service to the clients, improving economics for the end user. Strategically located on one of the world’s busiest maritime routes, Hambantota deep-water port allows Colombo Dockyard to offer afloat repair services to a multitude of vessels calling for transhipment, bunkering and other operations.
Colombo Dockyard is setting up the workshop at Hambantota International Port through Dockyard General Engineering Services, a fully owned subsidiary. The foundation stone for the engineering workshop was laid in August last year.
The acquisition of Colombo Dockyard was done through a combination of primary subscription and secondary acquisitions from the shareholders of Colombo Dockyard, including Onomichi Dockyard Co Ltd, a majority shareholder.
Colombo Dockyard, located in the Port of Colombo and listed on the Colombo Stock Exchange, undertakes shipbuilding and ship repairs.
Mazagon Dock, Colombo Dockyard and Onomichi Dockyard have signed definitive documents setting out the terms and conditions of the deal, which will make Colombo Dockyard a subsidiary of Mazagon Dock.
The acquisition will strengthen its position in the shipbuilding and repair industry by unlocking operational synergies, enhancing research and development capabilities and expanding market reach, Mazagon Dock said.
The acquisition is expected to be completed within four to six months, subject to fulfillment of customary closing conditions set out in the definitive documents, including receipt of statutory and regulatory approvals.
Colombo Dockyard is Sri Lanka’s top shipbuilding, ship repair, heavy engineering and offshore engineering facility, operating four graving dry docks with a maximum capacity of 125,000 deadweight tonnes (DWT).
Mazagon Dock’s purchase of Colombo Dockyard is similar to the strategy followed by India, which nominated Adani Ports and Special Economic Zone Ltd, India’s largest private port operator, to construct a container terminal in Colombo Port, one of the busiest container transshipment ports in the region.
