Portek International

[guru]

Hi Portek holders,

Mitsui just announced their counter-offer of $1.40 per share! This is 20c higher than ICTSI's offer though it's still shy of the $1.56 TP being put by some analysts recently. They also announced they have 51.29% irrevocable undertaking from the Lam trust and related parties. Does this means it's more or less a done deal?
Do you think ICTSI will make a counter-bid?

It feels like a done deal to me, thought the higher the merrier.

[dydx]

The alternative GO by Nomura Singapore - for and on behalf of prime-name Japanese conglomerate Mitsui & Co - at a higher price of $1.40/share announced very early this morning (13Jul11) at 0141 hours.....
http://info.sgx.com/webcoranncatth.nsf/V...B00607354/$file/Mitsui_Offer_Announcement.pdf?openelement [Offer anouncement]
http://info.sgx.com/webcoranncatth.nsf/V...B00607354/$file/Mitsui_Offer_Announcement_Presentation.pdf?openelement [Offer presentation slides]
is probably the best deal Portek's management and controlling shareholders have negotiated for themselves, as well as for all those still standing public or minority Portek shareholders. This latest alternative GO has the following positive elements -

(1) A higher GO price of $1.40/share, which is at a substantial $0.20, or 16.67%, premium over ICTSI's GO offer of $1.20/share.
(2) Mitsui & Co has already secured the support of Portek's management and controlling shareholders, with a combined 51.29% shareholding.
(3) Portek's management will be able to apply their expertise and experience in the port management and port equipment businesses to grow Mitsui & Co's global and expanding Logistics Infrastructure Business unit.

While I wished PSA could have been the white knight - to keep Portek which has made Singapore proud for the future generations of Singaporeans - it is indeed time for all Portek shareholders to pop a bottle of champagne and celebrate!

[yeokiwi]

Mitsui & Co has secured 51.29% shareholding with irrevocable undertaking from management and unless ICTSI wants to become a minority shareholder, I doubt it will counter offer.
So, yes. This will be the last bid.
It is certainly a pity to see a good Singapore company going to a foreign company.
Anyway, ICTSI also earn some kopi money during this period.

The most surprising part of the offer document is
"As at the date of this announcement (“Offer Announcement Date”), and to the best of the
knowledge and belief of the Offeror, the Offeror and the Relevant Persons (as defined in
paragraph 12.1 below) do not own or control any Shares."

During this period, the mitsui has not even bought a single share from the market. Those shrewd investors that bought the shares from open market after the third part interest was revealed are also popping champagne too.

[lonewolf]

During this period, the mitsui has not even bought a single share from the market. Those shrewd investors that bought the shares from open market after the third part interest was revealed are also popping champagne too.

It's only appears shrewd now becos there really was an alternative offer. Otherwise it would have been damn foolish. But going by the persistent market action after the ICTSI bid, those of us watching at the sideline kinda knew this was coming; of cos no one knows the what the alternative offer would be.

So does this also means that those who accepted ICTSI offer are kicking themselves? Or can they really withdraw their tender and accept the Mitsui bid? If that's the case, ICTSI would end up with nothing!

[cif5000]

More than 10m shares traded at $1.40-$1.41. Looks like ICTSI is exiting.

Project Portugal - cool huh!

---

I mean $1.40-$1.405

[donmihaihai]

During this period, the mitsui has not even bought a single share from the market. Those shrewd investors that bought the shares from open market after the third part interest was revealed are also popping champagne too.

It's only appears shrewd now becos there really was an alternative offer. Otherwise it would have been damn foolish. But going by the persistent market action after the ICTSI bid, those of us watching at the sideline kinda knew this was coming; of cos no one knows the what the alternative offer would be.

Or they have insider information or simply it was leaked

[lonewolf]

Or they have insider information or simply it was leaked

You are probably right. And it wont be the first (or last) time this (will) happen.

It does not seems right for ICTSI to be exiting. I thought their offer was also conditional? Hmm.. maybe this is the 'get out' clause for those who tendered previously to ICTSI to cash in on the Mutsui offer?

[dydx]

Could there be further upside on the GO or market share price for minority shareholders, or for that matter, all shareholders of Portek? I wonder.

With ICTSI still holding 16.93% - an effective, more than a 10% blocking stake to prevent Mitsui & Co's efforts and desire to privatize Portek - there is a fair chance that Mitsui & Co may have to pay, at the later and final stage of the game, a further premium over $1.40, in order to secure ICTSI's blocking stake.

So the most rational thing to do is that I shall just sit on my valuable Portek shares and on the fence till the end, as to sell my shares into the market now will simply mean that I will forego the right to this 'extra' premium.

[cif5000]

According to this website, Irrevocable Undertaking is "a binding agreement by a target shareholder to accept a takeover offer. An irrevocable undertaking may be either hard (binding in all circumstances), soft (ceases to be binding if a higher offer emerges) or semi-hard (ceases to be binding if a higher offer emerges which exceeds the existing offer by an agreed amount)."

Therefore, it seems that unless the irrevocable undertaking is unconditional the major shareholders can still accept a higher counter-bid. We don't know.

[dydx]

Today's BT report on Portek, re-produced in full......

"Published July 14, 2011
Sweet exit point for Portek shareholders

By JAMIE LEE

PORTEK International's second suitor has finally pulled its mask off. Shareholders hoping for a dramatic finish will be disappointed that a takeover battle with International Container Terminal Services Inc (ICTSI) has been swept off the table.

But take away the sound and fury over the takeover, and what shareholders have now is a pretty fair deal.

Mitsui & Co yesterday came out into the open to present a $213.5 million offer for Portek, or $1.40 per share. The trading house has secured the support of Portek founder Larry Lam and his management team, who together own 51.3 per cent of the company.

This is in the form of irrevocable undertakings from Mr Lam and his team - market jargon to say that once you decide to sell, you can't take it back or sell your shares to other interested parties.

After ICTSI made its earlier offer, Portek, which operates and manages ports in Indonesia, Algeria, Malta, Gabon and Rwanda, had turned up the suspense, saying it had been in discussions with a third party, which remained interested in the company but had not committed to an offer yet. It did not then identify the potential bidder.

That veil of secrecy did not sit well with the Securities Industry Council, which ordered the unnamed bidder to clarify its intentions. But to be fair, this could be due to cultural factors - the Japanese are known for taking their time with deals.

And shareholders, while kept in the dark, have not necessarily been disadvantaged. Mr Lam and his team, who have always held the majority stake in Portek, gave plenty of indications that the company was in deep talks with a second, albeit unidentified, party.

Mr Lam also continued to reserve public comment on ICTSI's offer, which is an indirect way of saying that he's waiting for something else. So having Mitsui win support from Mr Lam now - should not be surprising.

Mitsui's bid is almost 17 per cent higher than the $1.20 offered by ICTSI. This should also be seen in the context of the plump 69 per cent premium that ICTSI's offer had already provided over its then reference price of 71 cents for Portek shares.

A higher price naturally works out great for Mr Lam - who started Portek in the late 80s - and it also follows a recent triumph in court for Portek that came after ICTSI's bid.

Kim Eng analyst James Koh pointed out that an arbitration court in Paris had ruled in favour of the termination of a profit-sharing arrangement between Portek and a local partner in Gabon, which should bring in higher profit recognition of at least $3.4 million per annum for the Singapore company from fiscal 2011.

'Taking this into account would value ICTSI's offer at just 11 times historical price-to-earnings, and CEO Larry Lam might have hoped to get a sweeter deal,' said Mr Koh in a report yesterday.

Mr Lam might have also found more comfort in Mitsui's assurance that the management team should still be in control after the takeover - an assurance that was less forthcoming from ICTSI, a source familiar with the matter said.

Given that Mitsui now will have majority control, ICTSI will be hard-pressed for options, once Mr Lam chose to side with the competing bid.

Even if ICTSI raises its bid - it can, at best, secure 40-odd per cent of the shares, and no control. So Kim Eng's Mr Koh has advised retail shareholders to cash out immediately to avoid any deadlock.

DMG & Partners Securities earlier said that ICTSI's bid was under its fair value estimate of $1.56 per share, even though Portek's independent financial adviser had viewed ICTSI's offer as 'reasonably attractive'.

The brokerage valued the company at 14 times its earnings, and compared it to billion-dollar players in the region such as China Merchants Holdings and Tianjin Port.

Yesterday, DMG said that the Mitsui offer 'while at 10 per cent discount to our fair value estimate of $1.56 per share, is fair and enables shareholders to realise a meaningful premium over the ICTSI offer' and advised investors to take it up.

And if shareholders are still not convinced, they should note that shares of Portek surged 6.06 per cent yesterday to finish at all all-time high of $1.40, or matching Mitsui's offer price.

For a stock that has traded under a dollar for most of the nine years that it has been listed, the Mitsui deal offers a sweet exit point."