Cosco Pacific says bid only E500m for Piraeus

COSCO Pacific saw its share price slump by nearly 8% in morning trade today after the firm said it had offered a bid of around €500m ($769m) for the rights to operate two berths at Piraeus in Greece.

This was significantly less than the bid of €4.9bn that Piraeus Port Authority said Cosco Pacific had submitted when the port body opened bids yesterday.

No official explanation for the vast difference has been offered by either the authority or Cosco Pacific.
Industry observers have suggested, however, that the figure given in Piraeus Port Authority’s official statement may have been based on total rental that is forecast to be received over the potential 35-year duration of the deal and adjusted for inflation while Cosco’s €500m figure is based on Piraeus Port’s current net asset value, and assuming the company has to pay the whole amount of money tomorrow.

Cosco’s statement also doesn’t mention the value of planned investments at Piraeus where the strategic investor has to build pier III. Piraeus Port Authority’s calculation is also likely to have included the value of such investments.

Shares in the Hong Kong-listed terminal company opened at HK$14.50 ($1.86) today but crashed to HK$13.48 within 45 minutes of the market opening. The stock ended the day down 3.85% at HK$13.98.

Commenting on the share price slump Namura International analyst Jim Wong told Reuters: “There is a lack of clarity about this deal and people are still wondering why there is such a huge discrepancy between the numbers quoted by the Greek company and Cosco. Investors are not clear on what exactly Cosco is buying for the €500m. The stock is being punished because of all the misinformation in the market.”

Fulbright Securities general manager Francis Lun said investors were also spooked because of the relative high price and the impact on earnings.

“There are concerns that they paid too high a price for it. Their earnings, at least in the second half, may be affected because of the expenses they have to pay up for that,” he told AFX Asia.