£760m Arcus takeover offer agreed by Forth Ports board

The buyer, which owns transport interests across Europe ranging from toll roads to trains, pledged its commitment to invest in the long-term future of the Edinburgh-based business and to keep it headquartered in Scotland.

Under the deal, Otter Ports - part of Arcus's unlisted European Infrastructure fund which holds a 22.8 per cent stake in Forth - will pay 1,630p a share plus a dividend of 20p per share to shareholders.

Forth's chief executive Charles Hammond admitted it was a "very poignant day" for him after heading a listed company for the past decade and being with the business since 1989.

When asked if he believed he had a future with the company following a takeover, Hammond, 48, said: "I'd like to think so".

With the deal still to be approved by shareholders, detailed discussions have not taken place with existing executives about their future roles but Arcus stressed it was committed to working with employees and management to continue the success of the company.

"Arcus have been very supportive of the management team here throughout their involvement with the company," Hammond added.

Forth operates six Scottish ports including Leith, Dundee and Grangemouth along with Tilbury on the Thames. The takeover was unveiled alongside full year results for 2010 slightly ahead of expectations with underlying pre-tax profits of 36.6m on revenues 5 per cent higher at 181.9m. Volume through its Scottish ports was 11.6 million tonnes, an increase of 2 per cent.

The company said it was making good progress in positioning Leith and Dundee as major hubs for the renewables industry and revealed it was in discussions with Mitsubishi Power Systems Europe over the development of a facility at one of the ports.

Forth Ports chairman David Richardson said the offer, which came after three unsuccessful offers at lower prices last year from a consortium including Arcus, gave shareholders the opportunity to realise their investment for cash "at a fair price".

The deal had been flagged this month and the offer price represents a 14.3 per cent premium to Forth's closing share price of 1,444p the day before press speculation about a possible deal emerged.The share price rose strongly in the months leading up to the offer although is still well below the 2,200p seen in January 2008 at the height of the property market.

Rival bids are now thought to be unlikely and second largest shareholder Schroder has also indicated its intention to support the offer.

Arbuthnot analyst Gerald Khoo said: "Given the recommendation by the Forth Ports board, and the substantial shareholding of Arcus, we do not anticipate a competing offer."

Simon Gray, a partner of Arcus, described Forth Ports as "a strong Scottish company with high quality infrastructure assets and a robust business model".

If a deal goes through at 1,630p it would spark a multi-million windfall for the Forth Ports board. Hammond owns more than 90,000 shares in the company worth 1.48m with other directors owning more than 210,000 shares between them.

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

Shares in Forth Ports closed up 20p at 1,634p.

Infrastructure the key

London-based Arcus is a specialist investment manager founded in July 2009 from a management buy-out of part of fund manager Babcock & Brown's European infrastructure business.

Owned by about 40 investment managers, its Arcus European Infrastructure Fund 1 has more than €2 billion (1.74bn) of assets and is backed by institutional investors - mainly pension funds - from around the world.

Other interests include Euroports, a Luxembourg-based port operator which operates sites throughout Europe, although not in the UK, and Angel Trains Group, the largest rolling stock company in the UK with a fleet of more than 4,400 vehicles.