A Canadian asset management company has abandoned the sale of one of the UK’s biggest ports operators that is embroiled in a legal battle with a close ally of Boris Johnson.
The Toronto-based Brookfield Asset Management had put PD Ports up for sale in the summer, but said it had decided to call off the auction. The company owns 12 ports and distribution sites across the UK, including Teesport in north-east England.
The South Tees Development Corporation (STDC), which is run by the Tees Valley combined authority and headed by the authority’s Conservative mayor, Ben Houchen, had been bidding for the ports company, and had recruited a number of backers, including the UK’s Pension Insurance Corporation.
The decision to call off the sale is a blow to Houchen’s regeneration plans. He wanted to take control of PD Ports’ Teesport site, which is part of a plan for a government-backed freeport under Johnson’s “levelling up” agenda.
STDC, which owns the land around the adjacent Teesworks site, has sued PD Ports in an attempt to stop it using two of three access routes into Teesport. The port company in May accused the STDC of using the lawsuit “to extract a ransom discount” to enable it to buy the business at a lower price. Houchen and STDC have denied this.
The auction had also reportedly attracted interest from Peel Ports, another large UK port operator, which is controlled by the billionaire John Whittaker, and the Australian investment bank Macquarie.
Brookfield has owned PD Ports for 12 years. The news of the aborted sale was first reported by the Financial Times. A Brookfield spokesperson said: “PD Ports is a great business that has performed very well under Brookfield’s ownership and continues to have exceptional long-term growth prospects.
“The recent process has strengthened our conviction in the business, and we have made the decision to remain invested in PD Ports rather than sell the asset. We look forward to continued partnership with the management team as they execute the growth strategy for the business.”
Brookfield had reportedly hoped to get as much as £2bn for PD Ports, but offers of £1.1bn to £1.4bn were more likely, after the trading performance of the ports operator worsened.
Teesport is the fifth largest port in Britain by tonnage and considered the gateway to northern England. It is next to the Teesworks redevelopment site, which has been given low-tax freeport status after the chancellor, Rishi Sunak, unveiled further “levelling up” plans in the March budget designed to improve the economic prospects of communities across the UK.
Houchen, who was re-elected mayor of Tees Valley in May, and is a key ally of the prime minister, has pledged to create thousands of jobs by demolishing the SSI steelworks – which went bust in October 2015 – and transforming the area into a green energy hub. A successful bid for Teesport would have advanced his plans.