Peel Group could increase Forth Ports bid to £800m after airports stake sale

Published on Sunday 7 March 2010 21:21

TRANSPORT and property giant Peel Group is understood to be in talks to sell a majority stake in its airports division in a move that could see its bid as part of a consortium for Forth Ports rise to £800 million.

Peel – which is led by billionaire John Whittaker – is believed to be negotiating with Vancouver Airport Services to sell a stake in loss-making Peel Airports.

Vancouver already owns 30 airports and is seen as a turnaround specialist for struggling airports.

Peel Airports owns Liverpool John Lennon Airport, City Airport Manchester and Robin Hood Airport Doncaster Sheffield, as well as a majority stake in Durham Tees Valley Airport. The sale could raise up to 200m.

Edinburgh-based Forth Ports confirmed after the stock market closed on Friday that it had received two takeover offers from Northstream, a consortium consisting of Peel, Deutsche Bank's RREEF infrastructure fund, and Arcus, the infrastructure arm spun out from Australian investment firm Babcock & Brown.

The company rejected an offer of 1,285p a share in cash that was received on 28 January and then a further 1,340p a share offer on 3 February, which would have valued Forth Ports at about 612m.

"These proposals fall far short of the value of Forth Ports," the company said in a statement.

The consortium said it would consider raising its offer but only if Forth Ports gives it access to the company's books.

Forth Ports said it would meet with the consortium – whose members already collectively own 27.4 per cent of the business – but not until after 22 March, when the firm is due to publish its results for the year to 31 January.

At the interim stage in August, Forth Ports reported a 4 per cent drop in revenue to 86.6m, while operating profits fell by 14 per cent to 19m.

Forth Ports owns facilities at Leith, Rosyth, Grangemouth, Dundee, Methil, Burntisland, and Tilbury, near London.

"These ports generate an income stream with a high level of predictability and have strong organic growth prospects," Forth Ports said. "In addition, Forth Ports has a number of other valuable assets, including a 33 per cent shareholding in Tilbury container services, a substantial property portfolio, and a number of renewable energy projects."

Forth is also heavily involved in redeveloping Edinburgh's seafront, including Leith Docks, and the Western and Granton harbour areas.

The company's Ocean Terminal shopping centre is expected to receive a boost when the city's tram line reaches the arcade.

The group said it believes its development portfolio will increase in value when the property market recovers from the recession.

Peel Group already owns Clydeport – which consists of the ports at Hunterston, Greenock, King George V Dock and Ardrossan – along with the Mersey Docks and Harbour Company and the Manchester Shipping Canal. Peel is also developing Glasgow Harbour for what it describes as a mix of "commercial, residential, retail, leisure and public space".

Shares in Forth Ports closed up 17p on Friday at 1,117p but are expected to rise this morning as the approaches from Northsteam were only announced after last week's trading had ended.