Port of Tauranga will make a statement early next week on its proposed merger with Ports of Auckland, with one analyst suggesting it is likely to call the whole thing off.
Goldman Sachs JBWere said in a research note that it believed the port, buoyed by winning extra shipping services from Hamburg Sud, would not be prepared to wait any longer for the support of Ports of Auckland owner Auckland Regional Holdings.
In October the ports announced they were in merger discussions. But in February ARH said it needed a more detailed analysis of the business case and had hired investment bank Cameron Partners to help. On the same day Tauranga said it would make a "final decision" on the merger by the end of March.
Tauranga port chief executive Mark Cairns said the board would meet today and make a public statement on the merger early next week. As of yesterday the port still had not received a final decision from ARH. "We are still in discussions with ARH."
The Goldman Sachs JBWere note said: "Buoyed by solid operational outlook, including additional services from Hamburg Sud and potential higher export duties on Russian logs, we believe PoT is not prepared to wait any longer for ARH support."
Goldman Sachs JBWere ports analyst Marcus Curley said Hamburg Sud's announcement this week that it would shift its North Island southbound port call from Auckland to Tauranga made a merger less likely.
Hamburg Sud had suggested reasons for its shift were cost savings, better service and more efficient logistics, he said.
"You could read cost savings as being lower pricing of port services. It seems a little odd if you were sure a merger was going ahead that you would be aggressively looking to attract new lines into your port using price."
ARH chief operating officer Peter Casey would not say when ARH would make its decision but implied it was not imminent.
"We have never talked about time frames," he said. "The PoT's statements about deadlines may be giving people the impression that the merger is an easy thing to do. We did a lot of homework when we took the port private in 2005 and this thing is five or 10 times bigger than that."
Mr Casey said even if the ports agreed to the merger it would face significant competition hurdles.
Port of Tauranga shares have been trading as high as $6.45 in recent weeks and closed 15 down at $6.30 last night. Goldman Sachs JBWere values the shares at $6.40 to $6.60 if the merger succeeds but only about $5.30 if it does not go ahead.
