A Goldman Sachs-led consortium has outbid Australia’s Macquarie Bank for Associated British Ports after raising its cash offer in an auction to nearly 2.8 billion pounds ($5.2 billion).
But Macquarie is not out of the race and is considering its position despite losing one member of its bidding consortium.
Admiral Acquisitions, the Goldman Sachs consortium, said AB Ports had recommended a revised offer of 910 pence per share, 8.3 percent higher than its previous proposal of 840 pence.
“Clearly the Goldman consortium have demonstrated how extraordinarily keen they are to secure AB Ports and the issue is are Macquarie as keen?,” Oriel Securities analyst Gerald Khoo said.
“Management describe the offer as fair and reasonable. I would describe it as bloody fantastic. It does start to feel like a knock-out offer though.”
AB Ports shares were 4.1 percent firmer at 917 pence by 1405 GMT after touching a record high of 922.5 pence, signaling investors were still hopeful of a higher bid.
The revised offer from the Goldman group followed a late-night bidding contest after Macquarie approached AB Ports with an offer. The ports group asked both sides to put their best bids on the table, sources familiar with the matter said.
“Both sides were told you’ve both got a chance this evening, put your absolute best price on the table and that is what has come up as a result,” one source told Reuters.
The Macquarie group has told AB Ports shareholders to take no action over the increased Goldman bid, saying it was ”considering its position.”
Macquarie said UK private equity firm 3i Group Plc had pulled out of its bidding consortium.
Goldman Sachs is under pressure to complete a deal after making failed bids for airports group BAA, broadcaster ITV and pub company Mitchells & Butlers.
Port groups are 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 $6.8 billion takeover of P&O after a bidding war with Singapore’s PSA International.
Goldman said in a statement that AB Ports directors intended to unanimously recommend the latest Admiral offer which they considered to be “fair and reasonable.”
The deal values AB Ports at almost 16 times forecast 2006 earnings before interest, tax, depreciation and amortization, analysts said. This was above about 15 for Dubai Ports takeover of P&O, which was considered high at the time.
Goldman first offered 810 pence on June 14 for the group, which operates 21 UK ports, handling about a quarter of the country’s seaborne trade.
The Admiral group is 33 percent owned by Canada’s Borealis Infrastructure, the investment vehicle of Ontario pension fund OMERS.
It is 33 percent owned by GIC Special Investments Pte Ltd., the private equity arm of the Government of Singapore Investment Corporation; 23 percent by Goldman Sachs; and about 10 percent by the Prudential Group’s Infracapital Partners.
Admiral said around 1.43 billion pounds of funding for its bid would be provided by consortium members, with the rest from a loan arranged by Royal Bank of Scotland.
It added that the two parties had agreed to increase the break fee payable to Admiral if AB Ports pulled out to 1 percent of the offer value on a fully diluted basis under the acquisition.