Goldman group says may bid for AB Ports

A consortium including Goldman Sachs and investment groups from Canada and Singapore is considering a bid for Associated British Ports, sending shares in the country's biggest ports group to new highs.

Goldman Sachs said yesterday it was working with partners on a possible bid that analysts said could value the owner of 21 UK ports at more than two billion pounds, but there was no certainty an offer would be made.

The US investment bank said it had teamed up with Borealis, the investment vehicle of Ontario pension fund OMERS, and GIC Special Investments, the private equity arm of the Government of Singapore Investment Corporation.

Shares in Associated British Ports, which handles about a quarter of the country's seaborne trade, were up 3.8 per cent at 723 pence at 11.25 a.m., after touching a high of 751-1/2 pence.

The stock rallied 10 per cent last week on bid speculation and new government proposals that could allow firms to extract more value from property assets. AB Ports has a large property portfolio, including land used for port operations.

The potential bid follows last year's £3.9 billion takeover of P&O and a string of mergers and acquisitions in Europe's ports industry as shipping markets bask in a three-year boom on the back of growth in Chinese demand.

Analysts believe rival bids for AB Ports could emerge. "Given its No.1 market position in the UK, strong cashflows, available financial headroom and further potential to exploit the significant property holdings, we believe the assets are attractive to third parties," Dresdner Kleinwort Wasserstein told clients in a note.

Earlier yesterday, the City A.M. newspaper quoted an unidentified high-level source as saying the consortium was working on a 740-pence-a-share bid for AB Ports worth about £2.3 billion.

Analysts were split on how much AB Ports would benefit from budget measures announced last week to put property assets into a tax-saving real estate investment trust (REIT). JP Morgan said AB Ports had sold most of the property it owned that could have fitted into that category. One source familiar with the situation said AB Ports was still working out how much it could benefit from the measures.

It has 21 UK ports including Hull and Plymouth. It also has four port operations in the United States. The firm said yesterday it had not received a bid proposal but noted Goldman Sachs' announcement.

"The consortium's considerations are at a preliminary stage, and there can be no assurance that any offer will be made," Goldman Sachs said earlier in a statement.

Goldman, Borealis and GIC could not immediately be reached for further comment.

JP Morgan said a 740 pence bid would give AB Ports an enterprise value of 13.7 times its earnings before interest, tax, depreciation and amortisation (EBITDA), compared with 13.4 for the P&O bid.