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Lyttelton and Otago ports look into possible merger

By Paul McBeth

Thursday 30th October 2008

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Lyttelton Port, the largest in the South Island, agreed to investigate a merger with Port Otago, a further sign that consolidation in the shipping industry is forcing posts to follow suit.

In a joint statement today the companiesí respective chairmen, John Gilks and Rodger Fisher, said a steering group had been established to look into the benefits of a merger, and recommend a way for them to proceed.

The statement said there would be legal separation of the infrastructure from commercial activities to ensure local control over the ports. The merger aims to improve the portsí efficiency in a tough competitive environment.

Port companies are having to contend with shipping companies rationalising their routes and choosing so-called hub ports of call rather than visiting multiple facilities. Among changes, Maersk stopped visiting Port of Tauranga and made Auckland its hub.

Ports of Auckland looks set to bid on Port of Taurangaís shipping container business. The Auckland company has previously said a full merger with Tauranga is a logical move.

Port of Tauranga chief executive Mark Cairns told the New Zealand Herald that the port sector in New Zealand needs to consolidate so it will be prepared for the next generation of ships. Port companies must be run as successful businesses, he said.

Lyttelton Portís stock was unchanged at $2.22 and has dropped 7% over the last 12 months. Port of Tauranga last traded unchanged at NZ$6.40.

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