Bidding war for P&O Ports?

News 31 Oct 2005 by WCN Editorial

A bidding war for P&O Ports group is on the cards after the company announced in London that it had received a “tentative approach” from Dubai Ports World (DP World). This is the name for the newly-combined DPA, DPI and former CSXWT operations run by Mohammed Sharaf, formerly managing director of DPI Terminals. Shares in P&O Steam Navigation Company rose to their highest level in five years on the news, by 39 per cent to £4.2975 – enough to value the company at �3.12 bill (US$5.5 bill). Any offe

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Including joint venture interests, P&O Ports handled 13.8 mill containers last year, with Asian and Indian terminals accounting for half of this. Taking into account the forecast 12.5 mill TEU to be handled by CSXWT, various DPI concessions and home port operations in Dubai, the addition of P&O Ports would rocket DP World towards the 25 mill containers/year level, ahead of APM Terminals and much closer to PSA International (Temaskek Holdings), with Hutchison still in the top slot. These three groups have all been named as potential rival bidders.

It was already speculated that the takeover of P&O Nedlloyd by Maersk would leave P&O Ports “vulnerable” to a bid as it would lead to traffic shifting from its own operations to those run by APM Terminals. Competitive bidding would push up the asking price, but with the IMF forecastng an increase of 7.4 per cent in global trade this year and a further 7.6 per cent in 2006, P&O Ports’ portfolio in Asia and India in particular, along with its new concessions in northern Europe, must be an attractive proposition.

DP World is a commercial entity, as the regulatory and administration functions formerly undertaken by DPA have been transferred to the new Dubai Ports and Jebel Ali Free Zone Authority, headed up by Jamal Majid Bin Thaniah, formerly CEO of DPA.

DP World is being advised by Deutsche Bank on a possible bid. Banks in Dubai are awash with money and DP World is controlled by the emirate’s ruling family.