Goldman sails in with £2.8bn ABP bid

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Admiral Acquisitions, whose other members are the giant Canadian pension fund Borealis and GIC, the private-equity arm of the Singapore government, tabled a recommended bid worth 910p after a midnight auction with the rival consortium led by the Australian bank Macquarie. The Macquarie consortium, which is called Britannia and also features a big Canadian pension fund, immediately urged ABP shareholders not to take any action while it considers whether to come back with an even higher offer.

The holding statement sent ABP shares above Admiral's 910p offer price, preventing the consortium from adding to its 5 per cent stake in ABP by buying further shares in the market. ABP shares closed at 919p, indicating that the market is still hopeful the bid battle is not over.

Significantly, Britannia is not thought to have attempted to buy any more shares itself to add to its 1.7 per cent stake. It also said 3i - one of its original backers - had pulled out of the consortium.

The auction, which began on Thursday night and continued into the early hours of yesterday morning, was a repeat of the frantic closing stages of the BAA bid battle, which Goldman's lost to a consortium led by the Spanish construction giant Ferrovial and advised by Macquarie.

Advisers to Goldman's said that the investment bank was determined not to miss out this time, having failed in three previous attempts to buy UK companies. In addition to BAA, Goldman's has seen bids rebuffed for ITV and the pubs group Mitchells & Butlers. The 910p offer represents an 8 per cent improvement on the 840p Admiral bid a week ago and a 23 per cent increase on the initial 740p approach it made to ABP. Goldman's has 23 per cent of the consortium.

ABP is Britain's biggest ports operator, accounting for one-quarter of the country's seaborne trade. Its disappearance will leave only one UK-quoted ports operator, Forth Ports, and that too is expected to be snapped up as a consolation prize. Forth shares closed 2 per cent higher last night.

Including the break-fee which Britannia would have to pay if the Admiral deal falls through, it would cost it the equivalent of 921p just to match the offer now on the table. In addition, Britannia would probably have to offer shareholders extra to compensate for the fact that its bid would probably take longer to close. This could add another 8p or 9p to its costs. This means that a bid pitched at 920p would cost Britannia nearer 940p.

Admiral proposes to fund its takeover of ABP with an equal mix of equity and debt and has raised just under £1.4bn of loan finance from a syndicate of banks including Royal Bank of Scotland and Barclays.

Britannia is expected to wait until after the weekend to decide whether to raise its offer. Even if it admits defeat, Macquarie and its two fellow investors, Canada Pension Plan Investment Board and Australia's Industry Funds Management, will make a profit from the bid battle. At 910p, Britannia will net £4.7m from the sale of its 5.2 million shares which were bought for 820p, helping it to cover advisory and financing costs.

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