Forth Ports facing pressure after consortium walks away

Published on Thursday 27 May 2010 20:37

FORTH Ports shares are set to come under pressure today after the consortium stalking the group last night walked away from making a final bid.

In a statement released two hours after the stock market closed, Northstream said Forth Ports' assets – particularly its property holdings – were too difficult to value in the current economic climate.

Three previous bids culminated in a 14-a-share offer in May, valuing the firm at 643 million. The board of the Edinburgh-based ports and property group rejected the latest offer unanimously. Northstream, consisting of Peel Ports Holdings, Deutsche Bank's RREEF infrastructure fund, and Arcus, the infrastructure arm spun out from Australian investment firm Babcock & Brown, had been given a "put up or shut up" deadline of next Tuesday by the Takeover Panel.

The consortium said: "In light of the current economic uncertainty and the resultant difficulty of valuing Forth Ports' property assets from public information, the consortium is unable to justify increasing its proposed offer further. As a result, and after careful consideration, the consortium has decided not to proceed with an offer for Forth Ports."

The consortium had faced pressure to up its bid for the firm by as much as 150m after investment bank Nomura revised up its recommendations on the value of the group to between 16.50 and 17 a share, compared to a previous recommended high by other analysts of 15.

A spokesman for Forth Ports said Northstream's decision to walk away was "very good news".

"It is very good news for the shareholders who can share in the upside going forward," he said. "Shareholders clearly found their offer unacceptable. Clearly they were unable to meet our shareholders' expectations."

At the group's AGM in Edinburgh at the end of last month, Forth Ports' chief executive Charles Hammond, pictured left, defended the board's decision to reject the three takeover approaches, saying the company was "well positioned" for the UK's economic recovery.

Hammond said he was "excited" about growth prospects and stressed that plans to develop land holdings – including the regeneration of the port of Leith – and the building of wind turbines and bio-mass plants would generate shareholder value.

But a source close to the consortium said that the bidders had been put off from making a higher bid due to a "lack of transparency around the value of the property assets and the cost of the infrastructure development".

"They weren't given the information necessary to make them increase their offer from 14 a share," the source said,.

The bidders, which among them own a 27 per cent stake in Forth Ports, said they would terminate their partnership and will "work in their own capacity as individual shareholders".

Shares in Forth Ports had earlier closed up 4.9 per cent at 1,275p amid a wider market rally.