Hutchison shelves bid for control of NZ port operator
The international port investment arm of the Li Ka-shing flagship, Hutchison Whampoa, yesterday abandoned a $559 million bid for a controlling interest in Lyttelton Port Co, after a deal with the New Zealand firm's majority shareholder unravelled.
Christchurch City Holdings Ltd (CCHL), the investment arm of the city's government, was forced to increase to NZ$2.20 ($10.30) per share its offer for the 31 per cent it does not own in Lyttelton after a minority partner blocked an earlier sale to Hutchison.
Hutchison Port Holdings, which has agreed to buy 49.9 per cent, on February 14 offered NZ$2.10 each for 19.42 million shares, or $558.8 million, a 13.8 per cent premium to their average trading price for the six months before the offer date.
'Hutchison Port Holdings confirms that, in agreement with Christchurch City Holdings, it will not proceed with its proposed investment in Lyttelton Port, as CCHL has not been able to privatise [Lyttelton] on the terms anticipated,' Hutchison said.
'However, we remain open to further discussions with CCHL in the event they are able to complete the takeover on acceptable terms.'
It is understood CCHL's improved offer has the support of Lyttelton shareholders. But Port Otago, the minority shareholder that stymied the previous deal by increasing its shareholding to a 10.1 per cent 'blocking stake', remained unimpressed yesterday.
'We will not be accepting the new offer,' chief executive Geoff Plunkett told the South China Morning Post. 'We paid NZ$2.35 a share for our initial stake and we see more value in Lyttelton than that. It is a long-term investment for us and we have no intention to sell our stake.'
With Otago holding firm, Hutchison's bid to gain a controlling interest in Lyttelton would appear to be in jeopardy, scuttling its first port acquisition in Australasia.
CCHL said in a statement to the exchange that it would try to bring Hutchison back to the table if it was successful in obtaining 100 per cent of Lyttelton, which runs a small port by the same name.
Lyttelton generated most of its revenue from one container berth last year, moving about 177,000 boxes across its docks in the financial year to June.
It supplements that revenue with coal and dry-bulk businesses but its infrastructure is expected to need a substantial upgrade for the next two to three years, according to Lyttelton's chairman, Barney Sundstrum.
Last year, the firm increased its value by striking a three-year labour deal with union dockworkers, introducing a third shift and boosting box volumes 10 per cent year on year.
It has nevertheless been squeezed by shipping lines, which play regional ports off against one another to negotiate the lowest possible port-side costs.
Its revenue rose 7.6 per cent in the past financial year to NZ$66.5 million but earnings dipped to NZ$11.8 million.