Babcock & Brown wades into £337m bid battle for PD Ports

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The Independent Online

The Australian investment bank behind a £337m bid to snatch PD Ports from is fellow Australian rival Endeavour Ports moved to clinch the deal yesterday by snapping up a 7.2 per cent stake in its UK target.

Babcock & Brown Infrastructure, which late on Friday trumped an existing offer from Endeavour, paid £19m for 12.7 million shares in the Tees and Hartlepool ports operator. The raid gives the Sydney-based asset financier control over 52 per cent of PD Ports, either directly or via irrevocable pledges from investors to back its offer.

A source close to BBI said yesterday's share-buying spree "underlined its commitment" to acquiring the UK group. It has offered 148.5p per share and has also promised to pay the 1.5p dividend. PD Ports' board has unanimously backed the bid. Shares in PD Ports closed up 1.5p at 150p.

Endeavour, an Australian consortium comprising three infrastructure funds and the venture capitalist 3i, refused to concede it was beaten. It said it was "considering its position" and would make an announcement in due course. Analysts said Endeavour would have to raise its 142p-per-share bid to at least 160p per share to get back in the auction.

The battle for PD Ports comes days after the Singaporean ports heavyweight Temasek threatened to derail a £3.3bn agreed bid by Dubai Ports World for Britain's biggest ports operator, P&O. Temasek, which owns the Port of Singapore Authority, has amassed a 4 per cent stake in P&O and is thought to be keen to force DP World to break up P&O so it can share the spoils.

Ports are in the spotlight because of a three-year shipping boom on the back of surging Chinese demand, a worldwide economic recovery and expanding international trade. Ports are popular with Australian infrastructure fund managers, who value the assets for their steady flow of income and local monopolies over many cargos. Their secure cash flows make the assets prime candidates for being bundled into specialist funds and re-listed.

BBI has been stalking PD Ports since October. It owns one transport infrastructure asset, which operates the Dalrymple Bay Coal Terminal, one of Australia's largest coal export terminals.

PD Ports floated in July 2004 at 100p per share. Graham Roberts, the chief executive, has 3.5 million options at 100p, from which he will make about £1.7m.