Arcus makes £746m offer for Forth Ports

By Tamsin Brown
Updated: 03:06 EDT, 8 March 2011

Forth Ports, Britain's last quoted ports operator, could soon set sail for the private world after receiving a £746m takeover approach from its biggest shareholder.

Suitor: Shareholder Arcus is mounting another attempt to take over Forth

The Tilbury docks owner fought off a trio of approaches last year from a consortium made up of infrastructure investors Arcus, Deutsche Bank's RREEF and Peel Group.

They were never granted access to the ports group's books and finally walked away in May after their third offer of 1400p a share, which valued Forth at £640m, failed to impress the board.

But Arcus, formed in a management buyout of part of Babcock & Brown's European infrastructure business, has come knocking again.

This time the 22.8% shareholder in Forth Ports is offering 1630p a share. It has finally persuaded Forth's management to grant access to the company's books and it has been allowed to undertake 'certain confirmatory due diligence'.

Shares in Forth, which had already been cruising higher amid speculation of a bid, rose a further 86p to 1609p.

Gerald Khoo, analyst at Arburthnot, said: 'Although opening the books is still a long way from recommending an offer, we believe this gives an indication that the board considers the indicated price to be sufficiently high to not dismiss it out of hand.

'Given the substantial pre-existing shareholding of Arcus we consider it unlikely that an alternative suitor for Forth Ports will emerge.'

On top of the attraction of its seven UK ports, a deal would hand a buyer 400 acres of land on Edinburgh's waterfront.

Forth will release an external valuation of its development land bank at its results on March 22 and shareholders are expected to want to have that information at their fingertips before deciding on any takeover.

A deal would mark the end of an era for the British ports industry, with Forth Ports being the last in a long line of operators to leave the stock exchange.

The sector's players have been snapped up by investors attracted by their property assets, long-term contracts and stable earnings visibility.

Peel Holdings, which itself was taken private in 2004, bought Glasgow's Clydeport in 2002 and Mersey Docks & Harbour Company in 2005.

Associated British Ports, the owner of 21 ports around the UK, was taken over by Goldman Sachs Infrastructure Partners in 2006.

In the same year P&O was bought by Dubai World.