Svitzer Talks Down Desire To Dominate

Sydney Morning Herald

Monday July 10, 2006

Scott Rochfort

DANISH shipping firm SvitzerWijsmuller has formally lodged its $693 million takeover bid for Adsteam Marine and played down talk the global towage industry will soon undergo the same rapid wave of consolidation seen in the stevedoring and shipping industries.

In the biggest deal for Svitzer since it paid an estimated $US240 million ($320 million) for its Dutch rival Wijsmuller in 2001, it does not appear the chief executive of the merged group, Jesper Lok, has any urgent desire to dominant the global tug industry.

"I think there will be some consolidation over the next 20 years," Mr Lok told the Herald.

Given the merged SvitzerWijsmuller-Adsteam will provide more than double the tug jobs of its nearest rivals - Holland's Smit and Singapore's PSA Marine - Mr Lok said the combined group would still only represent 12 per cent of the market.

"I don't think we'll see the global players we see in the [shipping industry]. I still think it's a very, very fragmented market," he said, after SvitzerWijsmuller lodged its bidder's statement on Friday night, where it is offering to buy Adsteam for $2.54 a share.

After a painful restructure undertaken by Adsteam boss John Moller since 2003 to cut costs, "non-core" operations and debts, SvitzerWijsmuller said it also had no major plans to further restructure Adsteam - apart from rationalising at a head and regional office level. The company will also take on about $300 million of Adsteam debt.

Yet despite encountering little opposition in the first few days of the friendly bid, SvitzerWijsmuller still faces the challenge of winning over Adsteam's key institutional shareholders, which collectively hold more than 50 per cent of the towage group.

The deal is conditional on winning 90 per cent of Adsteam.

Mr Lok, meanwhile, attempted to play down concerns the deal could result in Adsteam tugs favouring the ships owned by SvitzerWijsmuller's parent, AP Moller-Maersk.

"It's not the towage companies who decide what gets into a port. It's the harbour master," he said.

"From a financial point of view I think it makes less sense," Mr Lok added, noting Moller-Maersk ships would not make enough calls into Australia to keep Adsteam busy.

The shipping industry so far has showed little concern.

Shipping Australia chairman Michael Phillips said: "It doesn't pose any issues because it doesn't create a monopoly.

"The only concern that we have is that the tonnage rates stay the same and the standards stay the same."

© 2006 Sydney Morning Herald

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