Macquarie Bank, Goldman in bid battle for AB Ports

LONDON: Australia’s Macquarie Bank proposed paying at least £2.58bn ($4.75bn) for Associated British Ports (AB Ports) on Thursday, the same level as a raised bid from a rival group led by US investment bank Goldman Sachs.

Associated British Ports (AB Ports), Britain’s largest ports group, said it had received a conditional bid proposal worth at least 840 pence per share from a consortium led by Macquarie and including UK and other Australian investors.

The proposal was aimed at matching an earlier raised bid from Admiral Acquisitions, the Goldman Sachs consortium, which lifted its cash bid to 840 pence a share from the 810p a share it agreed with AB Ports on Wednesday.

“The board is currently evaluating the Macquarie consortium’s proposal in light of the revised cash offer from Admiral,” Britain’s biggest ports operator said in a statement, urging shareholders to take no action.

AB Ports shares earlier leapt to a new high of 876-1/2p on hopes of a bidding war. The stock was 5.3% firmer at 870 pence. “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 nine pounds?”

Macquarie urged AB Ports shareholders to take no action with regard to the improved offer from the Goldman group. A source close to the matter said earlier AB Port’s board would hold a meeting on Thursday morning to discuss whether to recommend the new Admiral bid. 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 $6.8bn 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’ ’05 underlying earnings.

Analysts said this was around the top of valuations for recent ports deals, but added comparisons were difficult. “The valuation’s up there, but the difficulty is actually valuing the assets of the business, that is the land bank and the surplus land bank,” said Investec’s Lawson. “What is deemed to be operational by the current management today — others may have a different view.”

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, 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 £1.2bn 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, 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.