New offer puts £745m value on Forth Ports

Published on 06/03/2011 18:10

FORTH Ports, the Scottish ports and property business, yesterday moved closer to losing its independence after revealing a £745 million takeover approach from its largest shareholder.

The Arcus European Infrastructure Fund, part of a consortium which unsuccessfully tried to acquire the Edinburgh-based company last year, has made an indicative conditional offer worth 1,630p-a-share plus a 20p share dividend to reflect Forth Ports' 2010 performance.

Forth has given its suitor access to its books to carry out due diligence, an indication that the board believes the price - 105m more than the final offer tabled by the Northstream consortium last year - more accurately reflects the company's value.

"On the basis of this indicative proposal, the board has agreed that Arcus can undertake certain confirmatory due diligence," Forth said in a statement.

Although the offer only represents an 8.3 per cent premium to Forth's share price before the deal was announced, shares in the company have already risen strongly since the beginning of the year and are up 14 per cent in the last month alone amid continued speculation over a new approach for the company.

While no deal has yet been recommended to shareholders, analysts believe an agreement seems likely.

Gerald Khoo of Arbuthnot said: "Forth Ports' board consistently refused to open the books for due diligence last year but we believe this gives an indication that the board considers Arcus's indicated price sufficiently high to not dismiss it out of hand.

"Given Arcus's substantial shareholding we consider it unlikely that an alternative suitor will emerge."

Mark McVicar of Nomura said it had been inevitable that Arcus - which owns a 23.5 per cent stake in Forth Ports - would look to sell its stake in the company or make an offer at some point.

"The nature of these infrastructure funds is that they are required to deliver returns of 8-10 per cent a year but they can't do that by having an investment in a quoted company with a yield of 2-3 per cent. They had to do something."

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A deal at 1,630p would spark a multi-million windfall for the Forth Ports board led by chief executive Charles Hammond, right. Hammond owns more than 90,000 shares in the company worth 1.48m at the offer price with other directors owning more than 210,000 shares between them.

Finance director Wilson Murray, who is retiring this year, is the largest shareholder on the board with a holding worth more than 2.7m. The executive directors also own substantial share options in the company.

Forth Ports is the last remaining listed UK ports operator after the likes of P&O, Mersey Docks and PD Ports all fell victim to takeover approaches in recent years."I think if Forth Ports were to join them it would demonstrate that the stock market hasn't able been able to put an appropriate value on the very long-term nature of these businesses," said McVicar.

"The likes of Arcus, where most of the money is from pension funds, can take a much longer view of 20-30 years out."

Shares in Forth Ports closed up 5.38 per cent, or 82p, at 1,605p.