Forth Ports flings down gauntlet as Babcock buys on

The Australian group now holds almost a quarter of the British firm's shares yet seems in no rush for a formal offer. What price a bidding war?
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The Independent Online

Forth Ports has issued a "put up or shut up" demand to Babcock & Brown after the Australian group sparked £1bn-plus takeover talk when it acquired a fifth of the company's shares nine days ago.

Forth, the last remaining ports operator on the London Stock Exchange, is believed to be attracting interest from other potential bidders.

Babcock & Brown's European Infrastructure Fund, which took its stake in Forth to 20.4 per cent after paying around £20.20 for 19.6 per cent of the shares earlier this month, is thought to have snapped up more Forth shares on Friday, taking its stake to around 23 per cent, just 7 per cent short of the level which would automatically trigger a bid under LSE rules.

Forth said it had not received an approach from the Australian fund. Putting the ball firmly in Babcock's court, a spokesperson for Forth said: "It is for Babcock to clarify what its position is. With its investment Babcock clearly recognises the value in Forth Ports and understands it's an attractive investment both in terms of its ports business and property interests."

Babcock refused to comment on Forth's statement.

Forth's shares have rocketed 15 per cent to £22.12 since Babcock's investment was announced last week, but another leading investor in the ports group believes this does not necessarily signal an imminent bid from the Australian group. The top five shareholders said Babcock's move would prompt other potential buyers.

"Babcock may not be in a rush to make its own bid," said an investor. "But it might ride on the coat-tails of a bidding war."

Forth is unlikely to talk to bidders unless a bid of at least £25 a share is made. But an initial bid at the current price could interest management, whose chief executive is Charles Hammond.

Babcock is believed to have bought around 10 per cent of its 19.6 per cent purchase from a hedge fund, which sold out at £20.20, but it is not yet known what Babcock paid for its additional shares on Friday.

Other potential bidders include Macquarie Group, Borealis, GIC Investments, and a fund backed by the Gulf emirate of Qatar.

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