Third rejection for Arcus/RREEF in bid for UK ports

Arcus European Infrastructure Fund, RREEF and Peel Ports have had their third offer to acquire UK ports operator Forth Ports rejected by the company. The consortium had increased its bid from £612m to around £643m but Forth Ports thinks the offer still ‘falls far short’ of its true value.

Forth Ports, the UK’s only listed ports operator, has again rejected the advances of a consortium of Arcus European Infrastructure Fund, RREEF and Peel Ports, saying that its latest takeover bid still significantly undervalues the company.

The onus is now on the consortium – known as Northstream – to either make a formal bid for Forth Ports, which is holding its annual general meeting today, by June 1 or announce that it is not bidding for the ports operator. If the consortium does the latter, then it will not be allowed to bid for Forth Ports over the next six months, according to UK stock market regulations.

Northstream already owns 27.4 percent of Forth Ports. In its latest bid, it offered the ports operator £14 (€16.1; $21.5) per share in cash, excluding the proposed final dividend of £0.19 per share, valuing Forth Ports at about £643 million. Previously, it had offered the company £13.40 per share, valuing it at £612 million. It first offered Forth Ports £12.85 per share at the end of January.
In its latest offer, Northstream also proposed an alternate structure whereby there would be a cash offer with an option for Forth Ports to be paid part in cash and part via a “paper instrument” for the operator’s Ports and Recycling business to ensure it has continued exposure to the firm’s property development assets, Forth Ports said in a statement.

However, the company still thinks the consortium’s latest offer “falls far short of the value of Forth Ports”.

All members of the Northstream consortium are shareholders in Forth Ports. Arcus owns a 23.4 percent stake in the Scottish ports operator, having bought 20.4 percent when it was still the European Infrastructure Fund of Australian investor Babcock & Brown. Peel Ports, part of UK property and infrastructure group Peel, owns a 3.5 percent holding in Forth Ports with RREEF, Deutsche Bank’s infrastructure fund, owning a 0.5 percent consideration.

Forth Ports owns a portfolio of seven ports in the UK, including Tilbury in London, Grangemouth, Scotland’s largest container port, and Leith in Edinburgh. In addition, it owns a 33 percent shareholding in Tilbury Container Services, a substantial property portfolio and a number of renewable energy projects, the company said in a statement.