Dubai Ports World, the state-backed ports operator, have agreed to acquire P&O for £3.3bn.
The deal, which will create the world’s third largest ports company, involved an offer of 443p per share in a cash bid as part of an ambitious expansion strategy which has seen the Gulf company grow rapidly in Asia. The offer price was a 46per cent premium to P&O’s trading price before 30 October, when P&O confirmed it had been approached by a potential bidder. The deal is the latest big purchase by Dubai-government linked firms scouring the globe for assets to invest the Gulf emirate’s mountain of oil cash.
Hong Kong-based Hutchison, Singapore government investment agency Temasek and Denmark‘s Moeller-Maersk had been rumoured as potential counter bidders, however analysts admit that a rival bid appeared unlikely. Investec analyst John Lawson said: “P&O’s board has unanimously recommended the offer and together with provisional acceptances for 19 per cent of the group’s shares a counter offer is unlikely,”
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “P&O has been on a slow course towards becoming a focused ports operator over recent years with the de-merger of its cruise liner business into what is now Carnival Corporation and the listing of housebuilder Bovis Homes.
Dubai Ports said it planned to retain P&O’s management, staff and UK-France ferries business. It said the deal was about expansion rather than cost-cutting. “This clearly fits into the broader strategic picture given Dubai‘s ambitions to position itself as a hub, not just of shipping but of business,” said Zahed Chowdhury, head of research for HSBC in Dubai. The deal is expected to be finalised by the first quarter of next year.
P&O chairman John Parker said the company had not received any rival approaches from third parties.
Dubai Ports chairman Sultan Ahmed Bin Sulayem, one of Dubai‘s most powerful businessmen, said P&O would remain headquartered in London, adding that chief executive Robert Wood would stay on.
One of the sticking points of the deal was P&O’s pension deficit, though DP World have agreed to inject £125m into the UK firm’s pension scheme.