Singapore government keeps door open to a rival offer for P&O

Singapore’s Government has left the door ajar for an unsolicited US$6 billion rival bid for P&O, the British ports and ferries group, after stating that it was free to pursue “any future course of action”.

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By  Peter Klinger Published  December 11, 2005

Singapore’s Government has left the door ajar for an unsolicited US$6 billion rival bid for P&O, the British ports and ferries group, after stating that it was free to pursue “any future course of action”. Temasek Holdings, Singapore’s investment arm, confirmed that it had boosted its stake in P&O from 3.24% to 4.1% during last week’s share trading frenzy. The frenzy was the result of speculation that Temasek was trying to amass a big stake in P&O, pushing the British group’s share price as high as 494p, compared with the 443p level at which Dubai Ports World had struck its agreed US$5.8 billion takeover deal. However, the anticipation of a Temasek offer started to dissipate, fuelled by the Singaporean investor’s confirmation that it had acquired only an additional 6.46 million P&O shares, at a lower than expected 455.8p. The latest share purchases mean that any Temasek offer would have to be struck at at least 455.8p, valuing the maritime group's equity at US$6 billion. P&O’s shares fell 22p to 472p, still almost 7% above Dubai Ports World’s bid price. Temasek released a brief statement, its first in relation to P&O, but it failed to quash the speculation. The statement said: “Temasek wish to make clear that no statement has been made which imposes an obligation upon, nor restricts, them from any future course of action.” P&O, which will have to pay a US$60 million break fee to Dubai Ports World if Temasek launches an offer, would not comment further. Dubai Ports World’s takeover bid is structured as a scheme of arrangement, which means that it needs the approval of relevant courts as well as 75% of the uK group’s shareholders. Temasek would have to build a 25% stake in P&O to block Dubai’s offer, a strategy thought unlikely. However, Temasek, which is being advised by UBS, is unlikely to be content with a 4.1% stake in P&O. Unless Dubai raises its offer, Temasek could face a loss on its investment if forced to accept the Dubai bid. Dubai’s takeover of P&O is not scheduled to be completed until March. Meanwhile, PDPorts, another UK maritime group, confirmed last week that it had attracted a second bid approach, only days after agreeing to a US$550 million approach from a consortium including Kerry Packer, Australia’s richest man. Packer’s Endeavour Ports consortium is offering 142p of cash for each PD Ports share. Although PD Ports did not name the latest bidder, it is thought to be Babcock & Brown International, the Australian investment group. Babcock built a 10.6% stake in East Surrey Holdings while the utility was being stalked by Terra Firma, the investment group run by Guy Hands, the City dealmaker.

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