The Northstream consortium, which also includes fund manager Arcus and transportation infrastructure investor RREEF and holds a 27.4% stake in Edinburgh-based Forth, had been given a June 1 “put up or shut up” deadline by the Takeover Panel after Forth rejected a third bid approach in late April at 1400p a share.
It last night said that “economic uncertainty” meant it was not able to improve on a previously rebuffed £640m proposal.
However, an insider close to Peel said the consortium had dropped its bid plan because it had been refused access to due diligence.
The insider said: “We could not get a grip on the property assets and the costs of delivering the infrastructure. So in the end, we had no other option.”
While the consortium’s £640m offer had marked its third bid for the group, it has noted it was also prepared to make separate offers for the ports and recycling businesses and another for the property business, in which Forth also showed no interest.
Shares in Forth Ports have climbed significantly since the initial takeover approach, and rose by another 4.9%, or 60p, to reach 1274p yesterday.
However, the stock is likely to fall today on the news of the Northstream consortium’s withdrawal.
Most observers believe Northstream was attracted to Forth because property valuations have plunged in the downturn – although clearly consortium member Peel is drawn to a tie-up with Forth’s ports business.
Peel Holdings, which is run by Tom Allison and property tycoon John Whittaker, owns Clydeport, which handles around 7.5 million tonnes a year from operations at Hunterston, Glasgow, Greenock and Ardrossan, and a number of other water-based interests, including The Mersey Docks and Harbour Company and The Manchester Ship Canal Company.
Forth owns and operates seven commercial ports in the UK including Tilbury, Dundee in the Firth of Tay and five on the Firth of Forth - Leith, Grangemouth, Rosyth, Methil and Burntisland – as well as a property portfolio.
Its main property interest is in the regeneration of Edinburgh’s waterfront, where nearly 16,000 homes are planned over the next 30 years. Under the plan, nine so-called urban villages will be created, with the first to be placed beside Ocean Terminal.
In 2009, Forth’s own valuation of its property assets came in at £60m, significantly shy of the £281.6m valuation reached at the end of 2007.
Nonetheless, Forth Ports has insisted from the beginning that the consortium’s offer is based on last year’s figures and takes no account of the future opportunities for growth. It also contends that property values will come back in time. At the London port of Tilbury there are long-term benefits from the Olympic developments.
At the same time, the company has renewable energy projects and land on which biomass plants may be built.
The company consistently insisted that there is a “significant upside” for shareholders.
In addition, Peel has contended that investors would do better reaping a return from the takeover, rather than waiting for the recovery of the property market.
However, the Peel insider last night said: “All we can say now is that all the members of the Northstream consortium are shareholders in Forth Ports, and so they will have benefit from this upside when it happens.”
