Hutchison enters NZ with $558m Lyttelton port bid
The international port investment arm of Hutchison Whampoa yesterday bid for its first stake in New Zealand's container market by offering $558.8 million for a minority stake in the managing company at the port of Lyttelton on the country's South Island.
Hutchison Port Holdings agreed to buy 49 per cent of Lyttelton Port from its majority shareholder, Christchurch City Holdings, pending regulatory and shareholder approval.
Hutchison will pay NZ$2.10 ($11.06) each for 19.42 million shares, a 13.8 per cent premium on their average trading price over the past six months.
The deal is also pending Christchurch City's purchase of all the voting shares in the managing company it does not have under its 69 per cent equity stake.
Lyttelton is a small port on the outskirts of the South Island's main city of Christchurch. Most of its revenue comes from one container berth, through which it moved about 177,000 boxes in the financial year to June.
It supplements that revenue with coal and dry-bulk businesses but its infrastructure will need upgrading to compete with other ports in the region.
'We expect maintenance costs to remain at a high level for the next two to three years,' the management company's chairman Barney Sundstrum said in August.
Last year, the firm paved the way for yesterday's offer by striking a three-year labour contract with union dockworkers, introducing a third shift and boosting box volumes 10 per cent year on year.
It nevertheless has been getting squeezed by shipping lines, which play regional ports against each other to negotiate the lowest possible port-side costs.
Revenues rose 7.6 per cent in the past financial year to NZ$66.5 million but earnings dipped to NZ$11.8 million.
The port boasts China Ocean Shipping (Group), Maersk unit P&O Nedlloyd and Japan's Nippon Yusen Kaisha as customers.
The offer is to be taken to the management company's shareholders on March 8 with a close of April 10.
'It's a fairly mum-and-dad-type shareholding; there are no large shareholders,' a lawyer involved in the deal said. 'The advice [Christchurch City] has been given is that there don't appear to be any roadblocks to the deal.'