The prospect of a takeover battle for Forth Ports has sent shares in the owner of Rosyth, Grangemouth and Tilbury ports soaring by nearly a quarter.
After the market closed on Friday, the UK's only listed ports company revealed it had rejected two offers from a consortium of Peel Ports and infrastructure funds AEIF and RREEF. The first offer was £12.85 a share in cash, which was then raised to £13.40, valuing the business at £612m.
The consortium, which is named Northstream, owns 27.4% of Forth Ports, and said it may be willing to raise the offer. It said it wanted to discuss the situation with Forth's management, and a meeting is likely to take place after the company's results on 22 March. At the moment, however, Forth said it would meet the consortium in its capacity as a shareholder, and believed the proposals undervalued the business. Today, the first time the market could react to the news, Forth's shares have jumped 268p to £13.85. Analysts at UBS said an offer of at least £15 would probably be needed to win the day:
The publication of the proposal appears to be an attempt by the consortium to force further discussions with the company and to alert other shareholders that an offer has been made. We believe it is likely that further discussions will be held, although clearly the parties appear some way off any agreement on price.
Although there are few true comparable companies and historical transactions are somewhat redundant given they were done in a much easier debt environment, we believe that an offer of at least £15 would be needed to make a deal succeed.
Given the inherent uncertainties surrounding any potential deal, we retain our neutral rating, with a price target of 1,150p. Our valuation is based on a sum-of-the-parts.
