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Singapore group agrees to pay $3b for control of Asia Container Terminals

The international investment arm of Singapore's PSA Corp made another audacious bid for Hong Kong port assets yesterday, agreeing to a $3 billion cash payment for a stake in three berths held by NWS Holdings, according to sources close to the deal.

The deal, which is binding but requires shareholder approval, will give PSA International a controlling 54.2 per cent stake in Asia Container Terminals (ACT), which operates two berths at CT8 West, and 33 per cent of the single-berth facility known as CT3.

One banking source estimated yesterday that NWS would book a profit of $1 billion. Another source with knowledge of the deal said that was probably a 'very conservative' estimate.

'They have been positioning themselves all along to combine their stake to make it more attractive,' the banker said. 'The market has been speculating for some time now that HIT (Hutchison's Hongkong International Terminals), PSA and Dubai Ports have been making offers [to NWS].'

Hutchison could not be reached for comment last night. PSA spokesmen in Singapore were also not available.

NWS declined to comment but trading of shares in the company was suspended yesterday pending an announcement of price-sensitive information.

It is the fourth time in the past three months the state-owned PSA has made an aggressive bid to buy its way into the world's busiest container port. Each time its prospective partners, including NWS, have slammed the door by exercising their option to match the offer.

The spectre of a repeat performance hung over PSA  yesterday.

Mohammed Sharaf, the managing director of Dubai Ports International, last night said that as a fellow shareholder in both facilities, his company had the right to match the offer. But he did not say if it would exercise that right.

Reached earlier in the day, Mr Sharaf had said he was unaware of the reason for the suspension of the trading in NWS's stock.

Dubai Ports acquired the pre-emptive right when in December last year it paid  US$1.15 billion before tax and liabilities for the global port assets of United States  rail giant CSX Corp, a former shareholder in all three berths.

It is understood the deal does not include NWS's stake in Asia Terminals Ltd (ATL), the huge warehouse complex behind CT3, considered a cash cow.

Industry experts yesterday said the market was likely to look positively on NWS's sell-off. ACT has been a cash drain since its inception about four years ago. Its management has failed to secure a customer even though it has been operational since March.

CT3 lost its only two major customers last year and had been unable to replace them, while CSX was actively selling its stake.

Hong Kong port assets are expected to contribute only 18 per cent of NWS's port profits this year, according to analysts. The remaining 82 per cent will come from its 55.6 per cent stake in ATL and the company's mainland port assets, which include facilities in Xiamen and Tianjin.

The firm will remain a partner with Dubai Ports in the first phase development at Tianjin, in which it owns 24.5 per cent. It also owns 18 per cent of the second phase.

If at first you don't succeed

They're in

September 6: PSA emerges as one of four bidders for CSX Corp's global container-terminal network, including three berths in Hong Kong

November 2: PSA bids for Hongkong Land's stake in two idle berths owned by Asia Container Terminals

November 31: PSA offers $2.3 billion of SHKP's majority control of ACT

February 4: PSA bids $3 billion for NWS's stake in ACT

They're out

December 7: Dubai Ports International trumps all four offers with a US$1.15 billion bid for CSX port assets

January 1: CSX World Terminals and NWS Holdings match SHKP's bid



PSA returns for fresh raid on HK port assets