The battle for control of ports group P&O looked to be over today after the Singapore-based company PSA declined to improve its offer.
The decision effectively handed victory to Dubai Ports World, which sparked the tussle in November when it tabled an approach worth £3.3bn.
The Port of Singapore Authority – owned by Singapore’s state-run investment firm Temasek – briefly took pole position last month with an offer worth £3.5bn before DP World returned with a knock-out bid of £3.9bn.
DP World’s proposal will now go before P&O shareholders at a meeting at Wembley Conference Centre on Monday afternoon.
With DP World ports in locations including Abu Dhabi, Adelaide and Busan in Korea, the combined operation will have 51 terminals and a presence in 30 countries.
P&O’s operations and its historic brand will survive, with DP World expected to keep the London-based business separate and also maintain ownership of the ferries arm, even though it does not have any experience in this area.
Shares in P&O dropped 4% today amid disappointment that PSA had not improved its offer.
P&O chairman Sir John Parker praised PSA executives for their “professionalism and courtesy throughout the process.”
He added: “The combination of P&O and DP World has compelling strategic logic and will create significant opportunities for both businesses and their employees.”
The 520p a share offered by DP World, which is owned by the government of the United Arab Emirates, was much higher than many analysts had been expecting.
PSA described its own proposal of 470p a share as “full and fair”.
It added: “For PSA, to pay more than this price would not be compatible with commercial business sense and PSA’s future success.”
The purchase of P&O creates a “Big Four” of global port operators, with the combination of seventh-largest DWP and fourth-placed P&O taking the new group to third place in the rankings.
Hong-Kong based Hutchison is the largest company, with Denmark’s APM and PSA close to DP World in size.
Gavin van Marle, editor of Cargo Systems, a monthly ports and terminals magazine, said the move transformed the rankings of the port operators.
“You had a big three, headed by Hutchison and then a chasing pack led by P&O.
“This move will create a big four and leave a group of minnows behind.”
Founded in 1837, P&O carried cargo throughout the empire to Sydney, Calcutta, Singapore, Hong Kong and other colonies in its heyday.
It currently has three divisions – ferries, ports and cold logistics – but has dabbled in a number of sectors outside shipping in its history, including housebuilding with Bovis Homes and ownership of Earls Court exhibition centre.
Now P&O operates 29 terminal container terminals and logistics operations in more than 100 ports, while it also runs ferries between the UK and France, Belgium, the Netherlands, Ireland and Spain.
References: EGi News 10/02/06
