Peel tipped to make Mersey counter-bid

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The Independent Online

Peel Holdings last night appeared set to table a £780m counter-offer for Mersey Docks, after it bought more than 10 per cent of the ports group's shares in a single stock market transaction.

Peel Holdings last night appeared set to table a £780m counter-offer for Mersey Docks, after it bought more than 10 per cent of the ports group's shares in a single stock market transaction.

A private property company, Peel purchased the stock at £10 a share, much higher than a £9.25 a share cash indicative bid already on the table from a private equity group. Peel, which owns Liverpool's John Lennon airport and the Trafford shopping centre in Manchester, acquired 10.37 million shares, with the trade going through as a single block at 12.10pm. The seller was believed to be Schroders.

Peel has been a long-standing shareholder in Mersey Docks but yesterday's move more than doubled its stake to 25 per cent. That would be enough to block an offer tabled by CVC, which was joined this week by another financial group, Cinven. The CVC/Cinven offer requires support from 75 per cent of voting shareholders.

To the surprise of analysts, Mersey's management backed the CVC offer, which many in the City consider to be too low.

Mersey said this week: "This [CVC offer] fairly reflects the value of the business and, in the absence of a higher offer, represents an attractive exit price for shareholders."

It means that Mersey would be in no position to turn down a cash offer from Peel, if it should table an offer, analysts said. After yesterday's shares buying, Peel must pitch any offer at £10 or more, under takeover rules.

Analysts have been scathing about the support given by Mersey's management, led by the chief executive Peter Jones, for the CVC bid. In a research note, Alastair Gunn, of Arbuthnot Securities, wrote: "This [CVC offer] is below the growing consensus takeover valuation between £10-£12 per share prior to this announcement and yet management felt compelled to suggest 'this fairly reflects the value of the business and, in the absence of a higher offer, represents an attractive exit price for shareholders'. We beg to differ."

Mersey operates the Port of Liverpool plus ports at Heysham and on the Medway. Other activities include property development, transportation and shipping.

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