Arcus, RREEF and Peel drop interest in Forth Ports takeover

The two infrastructure funds and the port operator have cited economic uncertainty and the difficulty in valuing the target’s assets as the reasons for declining to pursue a takeover of the Scottish ports owner. The consortium, which owns a combined 27.4% stake in Forth, had seen three offers rejected.

The Northstream consortium, comprising port operator Peel Holdings as well as infrastructure funds Arcus Infrastructure Partners and RREEF Infrastructure, has abandoned its bid to take over Edinburgh-based Forth Ports after three successive bids were rejected by the target.

Northstream submitted its most recent bid of 1,400 pence per share last month for Forth Ports, which is listed on the London Stock Exchange (LSE) and owns and operates seven UK ports including Tilbury and Dundee. The offer, which valued the target at £640 million (€750 million; $932 million) fell short of the valuation placed on the business by its directors. Two previous approaches had also been rejected for the same reason.

The Takeover Panel had handed the consortium a 1 June “put up or shut up” deadline to make a further offer or walk away. A statement issued by the consortium yesterday said: “In light of the current economic uncertainty and the resultant difficulty of valuing Forth Ports’ property assets from public information, the Consortium is unable to justify increasing its proposed offer further. As a result, and after careful consideration, the Consortium has decided not to proceed with an offer for Forth Ports.”

The statement adds weight to media reports that the consortium had claimed it had been hampered in its ability to carry out due diligence, meaning that it had found it difficult to value Forth Ports’ assets.

Forth Ports had claimed that the offers made by the consortium were based on last year’s figures and did not take into account opportunities for future growth as the property market recovered over time. The consortium, which still owns a 27.4 percent stake in the business, will benefit from any such recovery as shareholders, assuming that it happens.

Shares in Forth Ports had risen significantly since the consortium made its first offer at 1,285 pence per share in January this year. Prior to the announcement yesterday, they had risen a further 60 pence (4.9 percent). As at 9.30am GMT this morning, they had fallen 145 pence (-11.4 percent) to 1,130 pence per share.