A Goldman Sachs-led group raised its bid for Associated British Ports to 2.58 billion pounds ($4.75 billion), prompting a proposal from a rival team led by Australia’s Macquarie Bank to at least match the offer.
Admiral Acquisitions, the Goldman Sachs consortium, upped the stakes on June 15 in a bidding war for Britain’s biggest ports group when it lifted its cash bid to 840 pence a share from the 810p a share it agreed a day earlier.
The Macquarie group followed with an informal bid approach, proposing to at least match the 840p offer, AB Ports said in a statement.
“The board is currently evaluating the Macquarie consortium’s proposal in light of the revised cash offer from Admiral,” AB Ports said in a statement, urging shareholders to take no action.
A source close to the matter said AB Ports was waiting to see if the Macquarie group had sufficient financing to fund a bid before opening its books.
Now that Macquarie has shown its hand, other infrastructure firms may consider rival bids although there had been no other approaches so far, the source said.
“840 (pence a share) will not succeed in my view,” said Investec analyst John Lawson. “We believe that AB Ports is worth up to 860p a share, but in a contested situation could we get to 9 pounds?”
Goldman under pressure
Goldman is under pressure to complete a deal after a string of failed bids, including for airports group BAA, broadcaster ITV and pub company Mitchells & Butlers.
Port groups have become attractive targets due to their stable income streams and property assets and with shipping markets buoyant on the back of growth in world trade. In March, Dubai Ports World completed a $6.8 billion takeover of P&O after a bidding war with Singapore’s PSA International.
The Goldman group said its new bid, which compares with an initial proposal of 730p a share that was rejected by AB Ports, was worth 26.6 times AB Ports’ 2005 underlying earnings.
Analysts said this was around the top of valuations for recent ports deals, but added comparisons were difficult.
Admiral said in a statement its interests had bought 15 million shares in AB Ports, or 5.1% of the company. The Macquarie group said it had 5.2 million shares, or 1.7% as of June 14.
AB Ports operates 21 UK ports, which handle about a quarter of the country’s seaborne trade.
The Admiral group is 33% owned by Canada’s Borealis Infrastructure, the investment vehicle of Ontario pension fund OMERS; 33% by GIC Special Investments Pte Ltd., the private equity arm of the Government of Singapore Investment Corporation; 23% by Goldman Sachs; and, about 10% by the Prudential Group’s Infracapital Partners.
Admiral said 1.19 billion pounds of funding for its bid would be provided by consortium members, with the rest from a loan arranged by Royal Bank of Scotland.
The Macquarie group includes two of the investment bank’s spin-off infrastructure funds as well as UK private equity firm 3i Group Plc, Canada Pension Plan Investment Board, and Australia’s Industry Funds Management.
The Admiral group is being advised by Goldman Sachs and Lexicon Partners. JP Morgan Cazenove and Morgan Stanley are brokers to AB Ports. (Reuters)