Dubai predator to offer ?3bn for P&O
published: cw 43, 2005 in Mergers & acquisitionsP&O, Britain?s biggest ports and ferries group, is set to receive a ?3 billion takeover approach from a Middle East rival as early as this week. Dubai Ports World (DPW), which is owned by the Gulf state?s government, has hired Deutsche Bank to advise it on a bid. Banking sources in Dubai said this weekend that a preliminary meeting between the two sides was likely to take place within days.
The Middle Eastern firm is understood to have contacted banks about financing a bid for the British ports operator. A stock-exchange announcement confirming its interest may be made as early as tomorrow. If completed, the deal would make P&O the latest FTSE 100 company to be acquired by a foreign counterpart this year, after the takeovers of the drinks group Allied Domecq and the logistics firm Exel.
An approach from DPW is almost certain to set off a bidding war for P&O, with Temasek, the Singaporean state investment firm, and the Danish shipping group AP M?ller-Maersk among other likely predators.
DPW is keen to acquire P&O, the world?s fourth-largest ports operator, to strengthen its position in the rapidly consolidating global ports industry. It is expected to try to persuade P&O?s management, led by chairman Sir John Parker and chief executive Robert Woods, that the long-term investment required for modern port development would be best done by a private rather than a quoted group.
P&O owns 27 container terminals and has logistics operations in 18 countries. Its British container-terminal operations include sites at Southampton and Tilbury, and the company was granted planning consent earlier this year for a ?1.5 billion development, the London Gateway port in Thurrock, Essex, which is eventually expected to account for as much as 10% of P&O?s total ports capacity. P&O also owns port operations in Africa and Australia and has operations in India, the Philippines and Sri Lanka.
A takeover would mark the end of a long restructuring of the company which has included the disposal of its 25% stake in the shipping firm P&O Nedlloyd, its golf-club and exhibition-centre assets, and the sale of its refrigerated logistics arm. The future of P&O?s ferries business has also been the subject of speculation in recent months.
A takeover bid for P&O would underline the high prices that are commanded by port companies. Two Australian financial institutions, Macquarie Bank and Hastings Fund Management, are understood to be behind recent approaches to another British group, PD Ports, which operates Teesport.
A takeover of P&O would lead to sizeable payouts for its directors, including Woods and the recently arrived Parker, who also chairs National Grid Transco and is a senior non- executive director of the Bank of England.
On Friday P&O announced the arrival of a quartet of non-executive directors, including former government minister Baroness Symons, Mike Turner, chief executive of BAE Systems, and Richard Gillingwater, chief executive of the government?s Shareholder Executive, an agency that oversees Whitehall?s interests in trading groups such as Qinetiq.
DPW was formed only a month ago from the combination of the Dubai Ports Authority and Dubai Ports International Terminals.
P&O shares closed on Friday at 310p, well short of the year?s high of 348p, valuing the company at ?2.3 billion.
Neither P&O nor DPW would comment. o Dubai Holding, the state-owned investment group that spent ?800m on Madame Tussauds earlier this year, will tomorrow announce a ?120m (?82m) investment in Interoute, the European telecoms carrier that has its headquarters in London. Interoute claims to be Europe?s fastest-growing telecoms provider, having been revived by chairman Jim Kinsella since sliding into insolvency three years ago. Controlled by the Sandoz family of Switzerland, it owns a 23,500km network covering 16 countries.
Source: The Sunday Times
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