Christchurch ends bid for full control of port

Christchurch City Holdings yesterday threw in the towel on its failed $225 million bid for full control of Lyttelton Port Co, saying it will not extend its offer beyond next week.

The move came as Lyttelton took umbrage over claims in documents and adverts made by CCH that the port's capital spending plans would result in lower dividends.

The port was perplexed by apparent confusion on the state of the talks between CCH and Hong Kong infrastructure giant Hutchison Port Holdings. It also slated a PricewaterhouseCoopers report, which was commissioned by CCH, and declared an independent valuation of $2.05 to $2.35 as too high.

Meanwhile, rival Port Otago said it had lifted its stake in Lyttelton to 12.2 per cent, potentially courting the attention of the Commerce Commission.

Shares in Lyttelton were last night steady at $2.22, still 2c above CCH's offer. It has lifted its stake from 69 per cent to almost 71 per cent.

CCH chief executive officer Bob Lineham said the city was calling time on its bid to encourage people to accept and would not launch another offer after the present one closed.

Instead, it will push on with plans for Lyttelton to form a joint venture with Hutchison, even though Otago now has a significant stake.

"We are satisfied we are in a position of strength already," Lineham said. "We are having continuing discussions with Hutchison."

Such statements have surprised Lyttelton, which believed the deal with Hutchison was off.

"LPC directors have received no indication from HPH as to its willingness or otherwise to revive or renegotiate the arrangements with CCH and ... have no knowledge that the position is otherwise than as they initially understood it to be."

Lyttelton said an interim dividend, to have been paid in March, was deferred pending the takeover outcome. But there was no suggestion from the board that proposed capital expenditure would lower dividends.

The directors were also concerned that Otago could be seen by the commission to be colluding with Lyttelton.

"As POL's shareholding in LPC increases, so too does the prospect of POL and LPC being alleged to be 'associated persons' under the Commerce Act," the directors said.

That association would impair Lyttelton's ability to make acquisitions, as the pair would be deemed "one head in the market" in terms of the lessening of competition. Under commission guidelines, as long as Otago keeps its stake below 15 per cent and does not seek board representation, that would not occur.

Despite yesterday's misgivings, the directors maintained a March 29 recommendation that shareholders sell into the CCH offer.

- additional reporting: NZPA