Value of sold-off ports is soaring

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The Independent Online
FORTH PORTS, privatised through a flotation last year, is planning a pounds 100m bid for rival Medway Ports, prompting a bonanza for Medway staff and potential embarrassment for the Government, writes Jason Nisse.

Sources close to Medway, which is hoping to float on the stock market next year, said approaches have been made by Forth Ports that might lead to an agreed bid. There have also been approaches from Powell Duffryn, majority owner of the Tees & Hartlepool port, and from Mersey Docks and Harbour Co.

The successful bidder is expected to have to pay at least pounds 100m, against the pounds 37m tag on Medway when it was privatised in in March last year through a management buyout, backed by Charterhouse bank.

Such a price would give massive profits for the 300 Medway employees. Under a recent incentive scheme, they have each been granted up to pounds 35,000 worth of share options at 250p a share. At pounds 100m, these shares would be worth pounds 35 each.

It would also bring a threefold profit for Charterhouse and is expected to lead to questions in Parliament about the price at which Medway was sold. The privatisation was heavily criticised at the time by Labour, which claimed the ports were being sold off on the cheap.

Forth would be likely to fund the purchase through a rights issue. Its shares have performed strongly, closing at 311p on Friday compared with a float price of 110p.

Forth Ports recently formed a joint venture property company which has announced a pounds 47.5m deal to develop an office block for the Scottish Office.