Ferries eye Dover bid
Sunday 13 August 1995
Neither company really wants to own the port, but each is threatening to bid in order to stop its competitor from gaining the upper hand.
"If it must be privatised, the main thing I'd seek is fair treatment thereafter," said Rudolph Agnew, the chairman of Sealink. "We've had no approach from P&O, but there's no reason why we can't work together."
Sources close to P&O said it would consider a joint venture, but both companies denied talking to each other on the subject. However, David Shaw, Conservative MP for Dover, is conducting shuttle diplomacy between them and the Dover Harbour Board to promote the idea.
"It would be very helpful if we could get a consortium bid together using the ferry companies, the management and employees of the port, with maybe the people of Dover being able to buy shares," he said. "P&O and Sealink could take a blocking minority stake to stop take-overs." Any bid by the ferry operators, either singly or in concert, would be likely to spark a referral to the Monopolies and Mergers Commission. The companies already have experience as port operators elsewhere in Britain, but expressed confidence in the existing management. "Ideally we'd prefer the status quo to continue," said Mr Agnew.
A joint venture would not necessarily lead to a merger of the two firms. Proposals that they form a single company were shelved last year and are unlikely to be revived, as both seem to be enjoying the spur of increased competition.
Other privatised dock companies are not expected to bid for Dover as it has less potential for growth than bulk cargo and container terminals. Sir Keith Stuart, the chairman of Associated British Ports, the country's most successful privatisation ever, categorically ruled out a bid last week. "ABP will not be taking any interest in the Port of Dover," he said.
The port, which is owned by a trust, did not volunteer for privatisation when new legislation was introduced in 1992 because it faced uncertain competition from the Channel Tunnel. Last month, Dr Brian Mawhinney, then Secretary of State for Transport, sent a letter to the port to start a consultation process on privatisation, the first step in exercising the Government's power to force a sale. His successor, Sir George Young, is expected to continue the pressure.
The harbour board reacted negatively to the proposal last week, pointing out that the full effect of the Chunnel has not been evaluated yet, and that new safety regulations for roll-on-roll-off ferries could raise fares and dampen demand. "Such a major asset should not, the board feels, be sold off hastily or at a knock-down price," it said. The port made pre- tax profits of almost pounds 5.1m last year.
The Government moves come amid rising optimism in the ferry business. A combination of the tunnel's teething problems and fare cuts by ferry operators has stimulated demand for the sea route to Calais this summer. Both ferry companies are expected to turn in healthy profits for the full year.
Sealink said last month it had a 27 per cent share of the short sea crossing tourist vehicle market, behind P&O at 43 per cent but still ahead of Eurotunnel at 24 per cent. Hoverspeed, the upmarket carrier, had just under six per cent.
One debt agency suggested last week that Eurotunnel would have to swap pounds 3bn of its pounds 8bn in debt for equity this autumn. Its turnover in the second quarter was just pounds 60m, well below the level needed to meet its full-year projection of pounds 525m.
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