(Dow Jones) SYDNEY -- Danish shipping conglomerate AP Moller-Maersk (MAERSK-B.KO) Monday launched a friendly A$693 million (US$516.3 million) bid for Adsteam Marine Ltd. (ADZ.AU), potentially sparking the interest of global rivals.
AP Moller's SvitzerWijsmuller unit said it will pay Adsteam shareholders A$2.54 a share, supported by the target's board in the absence of a superior offer.
Adsteam soared 29% to as much as A$2.61 on speculation that another bid is possible, before settling at A$2.57 on turnover of 15.2 million shares, more than 10 times above the daily average.
"We welcome SvitzerWijsmuller's cash offer as representing good value and being in the best interests of Adsteam shareholders," Adsteam chairman Bruce Corlett said.
The board has agreed to not solicit an alternative bidder and will pay Svitzer a break fee of A$6.9 million if any director withdraws their recommendation.
Analysts said potential rivals may include Hong Kong's HUD Group, a joint venture between Hong Kong billionaire Li-Ka Shing's Hutchison Whampoa Ltd. (0013.HK) and Swire Pacific Ltd. (0019.HK).
HUD is a major tug operator in Hong Kong and in July 2003 acquired a toehold in Australian towage with the purchase of 55% of Australian Maritime Services. An AMS spokeswoman had no comment about the bid for Adsteam.
Other marine services companies that may be interested include the Netherlands-based Smit Internationale N.V. (38378.AE) or Singapore's Keppel Corp. (KOT.SG) which both have significant global towage operations.
One analyst said Svitzer's bid is pitched at a "reasonably good" 25% premium to Adsteam's closing price Friday of A$2.03.
"This acquisition would give the combined body a much bigger geographic footprint and there is an increasing globalization of ship assist services," said the analyst, who works for a major international investment bank but asked not to be named.
"If you have someone doing this work for you in one port you'd like them doing it in another port," he added, noting that potential still existed for counter bidders to emerge.
Management of both Adsteam and Svitzer are confident the bid won't raise competition concerns.
"In Australia we've got approximately 65% of the market, I would think they would have about 3%, so there would be very little change (to local market share)," Adsteam chief executive John Moller told Dow Jones Newswires.
Svitzer chief executive Jesper T. Lok said in a statement that job losses are likely to be "modest".
"Adsteam has good workplace agreements in place and we do not envisage that they or the operational side and the crewing of the tugs will be impacted by the acquisition," Lok said.
Adsteam provides tugboat and related services in 42 Australasian ports and many major U.K. ports including Felixstowe, the Humber, Southampton and Liverpool.
"They're in 35 countries around the world, we're really only in two, and a lot of (Svitzer's) share is in Europe and the Middle East so there's very little overlap between the businesses," said Moller.
He noted that in Australia Svitzer only operates through a joint venture in the two West Australian ports of Bunbury and Dampier, both of which are not serviced by Adsteam tugs. In the U.K. the only common operating port is Liverpool.
Adsteam operates around 200 vessels, including tugboats, barges, workboats and launches. Sales in the 2004/05 year grew 8% to A$323.9 million. But its share price has been a laggard in the last 12 months, with a gain of just three cents to A$2.03 in the 2005/06 fiscal year compared with a rise of 18.5% in the local sharemarket's benchmark index.
Copenhagen-based Svitzer operates a fleet of more than 300 vessels providing towage, salvage and rescue operations and last year had sales of US$355 million across a much wider geographic spread.
Svitzer's bidders statement is expected to be lodged with Australian authorities this week, with Adsteam's response to follow within 10 days.
Adsteam is being advised by ABN AMRO while Citigroup is acting on behalf of Svitzer. .
Company Web site: http://www.maersk.com
