Kotahi

Strategic Partnership between Kotahi and Port of Tauranga

Summary

Cranleigh recently advised the management team of Fonterra-backed logistic company Kotahi on their negotiation with Port of Tauranga (POT) to form a strategic alliance.

With Kotahi volume commitment to POT, the port is likely to see deep draft 6,500 TEU container ships calling at the port by the end of the 2015, delivering a 'step-change' for New Zealand's $95 billion international trade sector.

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It allows Port of Tauranga to invest in improvements which will enable "big ships" to come into the port

And big ships mean:
An estimated $338 million a year savings for exporters (NZ Shippers Council report 2010).

An average 22% cut in carbon emissions per export container.

As part of the deal, Kotahi receives a shareholding in the port company and 49.9% ownership of the container terminal in Timaru.

Background to the Role

Kotahi is a Fonterra-backed logistic company that is responsible all of Fonterra's volume. Kotahi's management believes that by committing its volume, it will be able to extract significant value from the port compared to its current rebate arrangement. On top of that, Kotahi aims to create additional value by working together with a port to generate efficiencies and synergies.

The Business Need

Cranleigh was engaged to facilitate the negotiation. The strategic alliance between the two parties was broken down into three parts, each part being dealt with separately:

Value attributed to the volume brought to POT

Value attributed to the volume brought to Timaru Container Terminal

A joint venture to be established between POT and Kotahi to provide land-based logistic services

The Cranleigh Solution

Cranleigh's expert advisory assistance resulted in the successful negotiation between the two parties. Kotahi received $28m worth of POT shares for it volume commitment and a 49.9% share in the Timaru Container Terminal. The parties also successfully formed a joint entity which enables the two companies to cooperate on a whole new level.