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Friday 1st October 2010 |
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Lyttelton Port has abandoned two-years of merger talks with rival Port Otago because it is preoccupied with rebuilding after the Canterbury earthquake.
Lyttelton suffered significant damage to its port infrastructure and facilities as a result of the 7.1 magnitude earthquake which struck Christchurch on September 4. and required a review of "short and long term asset management and development plans," deputy chairman Bill Luff said. The final costs of repairs have not been disclosed.
"Given the magnitude and priority of the reinstatement work, it is not possible to continue negotiations," Luff said in a statement.
The announcement comes just three days after Lyttelton Port released its annual report, in which the company reaffirmed its commitment to the merger process.
Lyttelton and Otago first began negotiations after the two signed a memorandum of understanding in October 2008 to explore the possibility of merging. The deal was complicated by a key condition that each company retain ownership of its land and wharves, and that only the operations and commercial activities would be amalgamated.
In February the boards of both Lyttelton Port and Port of Otago announced that that they were satisfied with a report by Antipodes Capital and an independent review by Cameron Partners Investment Bankers which gave the green light to the deal. The details of the reports were not released, with the companies citing commercial sensitivity.
In a statement issued at the time, Lyttelton chairman Rodger Fisher said "the board and management of LPC remain fully committed to the negotiations as it remains our belief that amalgamation is crucial for the long-term viability of New Zealand ports", and that both companies were treating this project with the utmost urgency".
Lyttelton Port is majority held by Christchurch City Holdings, the wholly owned investment arm of Christchurch City Council which owns a 79% stake in the company. The shares were last at $2.49.
Port of Otago is wholly owned by the Otago Regional Council, and holds a 15% stake in Lyttelton Port.
Businesswire.co.nz
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