China Merchants Holdings (International) Co. said it will pay HK$3.17 billion (US$408 million) to buy out two partners at its Shekou ports business, as it seeks to consolidate its position in Shenzhen, an important hub in China's booming export trade.

The Hong Kong-listed company said it will buy out stakes held by conglomerate Swire Pacific Ltd. and P&O Dover (Holdings) Ltd., a unit of DP World, at the first and second phases of the terminal development. It will place these and other assets into a new joint venture with Modern Terminals Ltd., a unit of Hong Kong conglomerate Wharf (Holdings) Ltd. Modern Terminals has the option to sell its stake in the venture to China Merchants at a later date for HK$3.96 billion.

China Merchants Holdings (International) said the plans "will not only reflect a major step of the group in its efforts to align its interests in western Shenzhen, but also strengthen its position and enhance its competitive edge in the area."

China Merchants shares were up 3.4% at HK$30. Swire rose 1.4% to HK$83.95. Wharf was suspended from trading Friday ahead of the release of price-sensitive information, but the company didn't provide other details.

China Merchants said it will pay HK$1.39 billion to Swire Pacific for its 17.5% interest in the first phase of the terminal and 17.15% holding in the second phase of the terminal.

It will pay P&O Dover HK$1.78 billion for its 22.5% interest in the first phase of the terminal and its 22.05% stake in the second phase.

At the same time, China Merchants said it will form a joint venture with Modern Terminals to hold these and other port interests in the area. China Merchants will hold 70% of the joint venture and Modern Terminals 30% following the immediate completion of the acquisition.

The transactions would enable China Merchants to raise its stake in phase one to 90% from 50%, and its interest in phase two to 90.2% from 51%.

China Merchants said it will inject these assets, plus its 100% interest in the third phase of the port and 180,000 square meters of surrounding land, into the joint venture. Modern Terminals will inject its 10% interest in phase one and 9.8% in phase two into the venture.

China Merchants said Modern Terminals will have the right to require China Merchants to buy out its 30% joint venture stake for HK$3.96 billion under a put option arrangement. Modern Terminals can exercise the option one year from the completion of the acquisitions from Swire and P&O, it said.

The assets to be acquired from Swire and P&O had a combined net asset value of HK$746 million as of Sept. 30. For the nine months ended Sept. 30, these assets posted net profit of HK$131 million, China Merchants said.