UK port giant may consider
bigger offer from Canadian fund, Singapore Inc.
LONDON—Associated British Ports Holdings Plc, the biggest
UK ports company, may consider a sweetened £2.4 billion
($4.5 billion) offer from a team led by Goldman Sachs Group Inc.
Associated British Ports,
based in London, will open its books to Goldman Sachs after the
bid of 810 pence a share in cash, the company said Wednesday in
a statement. The port operator rejected a bid of 730 pence on
March 29 from Goldman Sachs, the government of Singapore and a
Canadian pension fund.
The sale of Associated
British Ports would be the third takeover of a British harbor
owner in the past six months as an increase in world trade and
expectations of steady earnings attract investors. Dubai’s
DP World in March bought Peninsular & Oriental Steam Navigation
Co. (P&O) for $6.8 billion after agreeing to sell US operations
to overcome opposition from Congress.
“If a deal does
crystallize at this price, then it’s good for investors,”
said Andy Murphy, an analyst in London at Panmure UK. “Associated
British Ports has reliable earnings, so it’s a great company
if you’re looking for a place to put pension fund money.”
Shares of Associated
British Ports rose 100 pence, or 15 percent, to a record 770 pence
in London, valuing the company at £2.3 billion.
The bidders are offering
about 14 times the port company’s 2005 earnings before interest,
tax, depreciation and interest, according to Panmure’s Murphy.
That compares with the 13.4 times earnings that DP World paid
for P&O.
Exec helps boost facility’s profits
CHIEF executive officer Bo Lerenius, who joined Associated British Ports in
1999 from Swedish shipper Stena Lina AB, has lifted profit at its 21 UK ports
by signing long-term contracts with importers including BHP Billiton, the world’s
largest mining company.
Cargo handled by Associated British
Ports rose 4.3 percent to 134.8 metric tons in 2005, helped by a surge in demand
for coal. Operating profit rose 54 percent to £171.1 million last year.
Associated British Ports, which was
sold by Prime Minister Margaret Thatcher’s government in 1983, owns ports
stretching from Southampton on the south coast of England to Troon on the northwest
coast of Scotland. They handle products from molasses to limestone. Goldman
Sachs’s bid is the second it has made for a UK transport company this
year. BAA Plc, the owner of Heathrow airport, in March rejected a £9.4
billion approach from a group Goldman Sachs headed.
Associated British Ports is forecasting
that earnings at its UK ports business will accelerate in the second half after
opening two new facilities at the port of Immingham, which is Britain’s
biggest port.
Deutsche Bank AG is advising Associated
British Ports. Simon Eaton, a spokesman for Goldman Sachs, declined to comment.
“It's clearly a more sensible
offer and management have opened their books,” said John Lawson, an analyst
in London at Investec Securities. Bloomberg
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