DP World cruising to P&O acquisition

09 December 2005
The directors of UK ferry operator P&Ohave unanimously recommended to shareholders acceptance of an offer by Dubai-based DP Worldto acquire 100 per cent of the company for a total of£3,326 million ($5,736 million), the two companies announced on 29 November - the first official confirmation of the UAE firm's takeover bid. Citigroup and Rothschildare advising P&O on the transaction, while Deutsche Bankis the financial adviser to DP World (see Banking & Finance).

DP World's offer for the company represents a 46 per cent premium for existing shareholders on the value of their stock and is based on a trailing price/earnings ratio of 24.5. 'DP World's acquisition of P&O will create a top three global ports operator with the scale and network to service an increasingly global and consolidating customer base,' said DP World chairman Sultan bin Sulayem in a statement. 'The unparalleled strategic fit of the companies' complementary global ports portfolios and the strong development pipeline, including London Gateway, is particularly compelling.'

P&O operates 29 container terminals and has a presence in 18 countries. However, it reported a sharp downturn in first-half earnings and has recently been restructuring its operations (MEED 4:11:05).

DP World, which was created in September through the merger of Dubai Ports Authority and Dubai Ports International, has become one of the world's largest port operators as a result of aggressive international expansion, most recently acquiring sites for container terminals at Yarimca in Turkey and in Shandong province in Eastern China. In 2004, the company handled more than 8 million 20-foot equivalent units (TEUs) and it expects to handle more than 13 million TEUs in 2005 (MEED 18:11:05).


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