I Squared prepares offer for Wilson Sons, but competition may arise

After being stalled for over a year, the sale of Wilson Sons is expected to heat up in the coming days. Investment firm I Squared Capital, which had been negotiating the purchase of the port operator, was unable to advance in bilateral talks with the company’s controlling shareholder, Ocean Wilsons Holdings Limited (OWHL). However, I Squared is preparing a voluntary public offer to acquire up to 100% of the shares, which will be presented directly to the company. Meanwhile, OWHL said it is negotiating with another group. People familiar with the deal say the interested party may be MSC, which declined to comment.

On Wednesday (16), I Squared sent a letter to Wilson Sons, with a copy to the Securities and Exchange Commission of Brazil (CVM), informing the port operator of its intention to present an offer within 15 days, as previously reported by Valor and confirmed by the company in a regulatory filing on Thursday.

In this plan, which is still under review by the asset manager, the conditions of the public offer, including the price, will be outlined. On Thursday, Wilson Sons’s shares closed at R$17.13 on the B3 exchange, up 6.28% from the previous trading day. The shares began to rise after Valor reported about I Squared’s intent to make an offer. At this price, the company’s current market capitalization is around R$7.5 billion.

If I Squared’s plan is confirmed after presenting its proposal in 15 days, the acquisition process could begin within 30 days, one person said. The completion of the transaction would still depend on several approvals, such as from the Administrative Council for Economic Defense (CADE) and the National Agency for Waterway Transportation (ANTAQ), which could take at least four months.

Om Thursday afternoon, CVM requested clarifications from I Squared regarding the public share acquisition offer and asked for more specific timelines for the process. In the letter, the regulator required I Squared to respond by November 1 regarding any potential breach of the confidentiality required by law before offers are disclosed. Additionally, it asked the firm to indicate by next Thursday (24) the deadline for launching the offer.

However, beyond I Squared’s plans for the proposal, the firm is likely to face competition in the bid for the asset. In a regulatory filing issued by Wilson Sons on Thursday, the company also noted that a second party is interested in purchasing control of the port operator and is already negotiating with OWHL, which holds 56.5% of the company’s shares. Besides the controlling shareholder, Wilson Sons’s partners include Tarpon Capital (12.11%), Radar (9.62%), and 21.8% of the shares traded on the stock exchange.

In the past, OWHL had negotiated the sale of Wilson Sons with PSA International, owned by Temasek. However, people familiar with the matter suggest the current interested party is the container shipping group MSC.

The MSC Group already operates several container terminals in Brazil and, in recent years, considered acquiring another terminal operator, Santos Brasil, which was sold about a month ago to the shipping and logistics company CMA CGM. With Santos Brasil off the market, Wilson Sons would have become more attractive to shipping groups, which have been betting on a vertical integration strategy, experts say.

I Squared had been negotiating with OWHL for several months. However, people close to the deal said the attempt to reach an agreement with the controlling shareholder officially fell through last Monday.

In a letter, I Squared informed OWHL of its potential voluntary offer to purchase up to 100% of Wilson Sons’s shares. I Squared and OWHL had signed an exclusivity agreement in early August, lasting until early September, according to people who spoke on condition of anonymity. During this period, talks made little progress. Throughout September, even after the exclusivity period ended, the investment firm remained interested in the purchase.

However, a source said that by the end of September, there were indications that OWHL intended to change the terms being discussed, and it stopped responding. This prompted I Squared to announce the end of bilateral negotiations with the controlling shareholder and move towards a public offer, to be made directly to Wilson Sons.

The perception was that OWHL was not fully committed to negotiating with the investment firm and that discussions were progressing slowly. When the exclusivity agreement was signed, a person close to the deal said there was already consensus on the general framework of the transaction, including the price. However, in practice, the parties never managed to sit down and negotiate the final terms.

I Squared declined to comment. Wilson Sons said it would comment only through a regulatory filing. MSC also did not comment on its potential interest in Wilson Sons.

The sale of Wilson Sons has been an ongoing story in the port industry. In 2011, the asset was put on the market, but the deal did not materialize. The attempt was revived last year. In June 2023, OWHL announced its intention to sell its stake in the company. Since then, the company’s shares have surged. Before the sale plan was confirmed, the shares were trading at a much lower level—on June 9, 2023, the stock ended the trading session at R$10.52, representing a market cap of around R$4.6 billion.

The company operates two container terminals, in Rio Grande (Rio Grande do Sul) and Salvador (Bahia), in addition to running tugboats and offshore support vessels. In 2023, Wilson Sons posted net revenue of R$2.4 billion, up 6.8% year-on-year. Net profit was R$404.9 million for the year, a 19.5% increase over 2022.

The chart below uses DataLiner data to assess container exports and imports at the Port of Rio Grande between January 2022 and August 2024. DataLiner data encompass only long-haul shipments, not including cabotage or transshipment operations.

Rio Grande Container Exports & Imports | Jan 2022 – Aug 2024 | TEUs

Source: DataLiner (click here to request a demo)

I Squared, which manages approximately $40 billion in infrastructure assets globally, opened an office in Brazil in mid-2023 and has since announced the purchase of a 49% stake in the distributed generation company Órigo Energia.

In the case of Wilson Sons, according to sources, the firm’s strategy is linked to Brazil’s commodity export potential, and it sees positive prospects across different business segments, such as liquid bulk operations, tugboat services, and container terminals. One plan includes expanding the company in the country, with interest in acquiring other container port terminals.

By Taís Hirata

Source: Valor International

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