Port Otago has reaped $3.24 million in dividends from rival Lyttelton Port of Christchurch (LPC) since it acquired its 15% blocking stake four years ago, spending $35.6 million at the time.
The net return on that cash investment has been 2.1% per annum, but when coupled with the gain in share price of 2.75% per annum (had they been sold), the Otago Regional Council-owned Port Otago has achieved a net 4.9% annual gain.
Craigs Investment Partners broker Peter McIntyre said Port Otago's return was both "reasonable and satisfactory", given the volatility during the past four years, including the recession period during the past 18 months.
"For an investment which is a strategic stake, it has provided a reasonable cash flow during the past four years," Mr McIntyre said.
For the past four financial years, to June 2008-09, Port Otago has delivered a total $29.95 million in dividends to the regional council.
Last week, the respective councils which own Port Otago and LPC were both in agreement that "in principle" the pair should continue merger discussions, which have been ongoing for 20 months.
Confidentiality surrounds the proposal, with neither party elaborating on details, which will require Commerce Commission approval.
In February, the Otago Regional Council, which 100% owns Port Otago, gave its approval for discussions to continue, preferably with a decision made by the end of 2010.
On Thursday, the Christchurch City Council subsidiary Christchurch City Holdings Ltd, which holds 78% of stock exchange listed-LPC, issued a brief statement through the exchange that it was "in principle supportive of the proposed operational merger with Port of Otago" - which has a 15.48% stake in LPC.
"LPC will now continue to negotiate with Port Otago with an objective of reaching an agreement to merge the two companies' port operating businesses," the statement said.
Port Otago took its contentious $35.6 million blocking stake in LPC four years ago, surprising the market at the time.
In April 2006, Port Otago ratcheted up the pressure in its bid to acquire more LPC shares, increasing its offer to fence-sitting minority shareholders by 2c to $2.24, declaring at the time it wanted a total 15% stake.
Port Otago successfully gate-crashed Christchurch City Holdings Ltd's bid for a 90% takeover of LPC, which would have allowed it to then sell off 49% of the company to a global port management company, which subsequently departed the fray.
LPC shares were trading about $2.50 on Friday.
