Shipbrokers in merger talks after 30% plunge in oil price

Merge lanes road sign

Plunging oil prices have triggered merger talks among London’s shipping and offshore brokers, with key companies including Clarkson, Icap and Howe Robinson all in discussions.

With shipping in the doldrums, brokers have been relying over the last couple of years on the offshore oil industry to boost profits but a 30% plunge in the crude price has caused panic.

Clarkson, the world’s largest shipbroker, confirmed on Friday it was hoping to acquire RS Platou, a major Norwegian-based rival which also controls a significant operation in the UK.

Icap and Howe Robinson are also understood to be looking at options and sources predicted some kind of merger deal between those firms could be unveiled as early as next week.

Clarkson said the purchase of privately-owned Platou, which some believe could cost up to £200m, made commercial sense: “Given the complementary activities, in terms of geographic locations, operations and industry specialisation, the boards of both Clarksons and Platou believe the enhanced offering of the combined business positions the enlarged group as a leading integrated global shipping and offshore group.”

The move could have reunited Clarkson with its flamboyant former chief executive, Richard Fulford-Smith, who left and joined Platou, but the Ferrari-driving shipbroker has unveiled his own plans to buy out Platou’s UK business.

While key parts of the shipping market such as dry bulk carriers and container ships have continued to struggle against massive overbuilding of tonnage and tepid volume growth, Clarkson has continued to prosper.

In the first half of this year Clarkson increased revenues by a quarter and has seen its share price rise strongly on the back of a generous dividend policy giving it extra clout for acquisitions.

In August at its interim statement it hinted it was on the takeover trail: “Our balance sheet is strong and we continue to look for opportunities that would enhance our integrated business model in each division, whilst concentrating on steady organic growth to ensure that Clarkson remains the market leader.”

The Platou purchase is particularly attractive because it is very strong in offshore, notably in the still buoyant Norwegian North Sea, but also a big player in maritime investment banking, industry experts said.

Clarkson has long tried to build up its financial services side but the current chief executive, Andi Case, has never found it as easy as growing other activities, they noted. Platou has 18 offices worldwide and employs around 370 staff while Clarkson has more than double the offices and staff.

Fulford-Smith believed a Clarkson/Platou partnership made a lot of sense for shareholders of both sides but said he did not want to be part of any public company now.

“I wish them good luck but we [Platou London] are going to go our own way. I think this is still a people industry that fundamentally belongs in the private sector. We decided some months ago to do a management buyout because Peter [Anker, the boss of RS Platou] wanted to do an IPO and we did not want to be part of that.”

Meanwhile Icap and Howe Robinson are also said to be close to concluding a deal. Publicly-listed Icap is owned by former Conservative party chairman Michael Spencer, while Howe Robinson is privately owned and chaired by Peter Kerr-Dineen, a former chairman of the Baltic Exchange, a shipping market and provider of maritime market data.

Kerr-Dineen would not comment directly on Icap but confirmed it was looking at a range of options to position the business for the future. “We could reform ourselves, sell ourselves, merge or take over a weaker competitor. This is the right thing to do when, as now, we are at the beginning of a new market cycle.”

Icap declined to comment but reform of the shipping arm – a relatively small part of a wider money broking business – is known to be on the company’s agenda. In the summer Braemar, another London-based broker, completed a merger with ACM Shipbroking.

Powered by Guardian.co.ukThis article was written by Terry Macalister, for The Guardian on Friday 14th November 2014 19.08 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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