Forth Ports takeover talk heats up

Published on Sunday 13 January 2008 20:31

PERENNIAL takeover target Forth Ports may move closer to being in play after reports that Australian investment bank Babcock & Brown has already built up a 10 per cent stake.

According to weekend newspaper reports, B&B has agreed to buy a stake of just over 8 per cent held by Goldman Sachs, while a stake of about 2 per cent was bought on the market on Friday.

Rumours of a bid from B&B have circulated for weeks, while a price of 24 a share, a premium of more than 20 per cent on current levels, have been touted. This would value Edinburgh-based Forth at 1.1 billion.

Shares hit a seven-month high of 2,011p on Wednesday as speculation intensified, but ended the week at 1,938p. The Sydney-based group has not filed a statement as a major shareholder – required when a holding becomes more than 3 per cent – but if the reports are correct, then it should do so this week.

Forth Ports, which owns seven UK ports, including Grangemouth, as well as a massive land holding in Leith, is the last remaining listed British ports company. As infrastructure assets have been snapped up, it is frequently touted as a likely target.

Analysts told The Scotsman that, while property values are below the level of 12 months ago, port prices may have improved as assets become less readily available. In addition, Forth's own plan for its land in Leith is for development over 30 years, meaning short-term property values will be less relevant to a bidder.

Forth Ports' chief executive, Charles Hammond, has previously declined to comment on speculation, and the firm could not be contacted yesterday. In Australia, a spokeswoman for B&B also declined to comment.

B&B acquired British firm PD Ports two years ago for 260 million and has since bought ports in Belgium, Germany and the US.