Port shareholders not selling

Ports of Auckland minority shareholders are resisting a full public takeover offer, prompting suggestions the price needs to rise.

Auckland Regional Holdings' $8-a-share bid for the 20 per cent of the listed ports company it does not already own had attracted just 3.83 per cent until yesterday. The $170 million offer was launched more than seven weeks ago, on April 1, when the share price was $6.45.

One analyst said ARH would have to increase its offer by between 20c and 50c because it had underestimated the port's potential should competition with the Port of Tauranga ease.

Tyndall Investment Management fund manager Rickey Ward said the "offer price does not reflect the true value of the land" and ARH's power to rezone the land had a big influence over the company's value.

An independent report by valuer Grant Samuel said the value of the port company's waterfront investment land could nearly double overnight to nearly $200 million when it was rezoned from industrial to commercial and residential.

Grant Samuel concluded the full underlying value of a port company share was between $7.68 and $8.55.

The port company's independent directors said the offer was fair but might not be reasonable. The offer values the company at $848 million.

Ward said the fact that the company's share price was about $7.90, below the $8 offer, reflected the market view that the bid would fail.

But ARH chairwoman Judith Bassett was yesterday upbeat the public body would achieve 100 per cent ownership and said it would not increase its $8 offer price.

"We encourage shareholders to accept the offer as soon as possible, so that it can be declared unconditional," she said. Shareholders will be paid within seven days of the offer being declared unconditional.

ARC chief operating officer Peter Casey said the $8 offer was at the "midpoint" of the Grant Samuel report, which concluded it was fair to shareholders.

ARH views the full public takeover as a chance to preserve Auckland's waterfront for the "integrated development" of the waterfront area for port operations and public use. At present, the company has to consider minority shareholders' interests, which has hamstrung moves to develop port land for public use.