Directors of ports and ferries firm P&O jumped ship today to recommend a £3.55bn takeover offer from Singaporean rival PSA International.
The offer from PSA, which is wholly owned by Singapore’s state-run investment firm Temasek, trumps a previously agreed £3.3bn proposal tabled by Dubai Ports World in November.
PSA said an enlarged company would have the financial clout, scale and global network to compete effectively against rivals in the ports industry.
Fock Siew Wah, chairman of PSA, said: “It is our intention to integrate quickly in order to add value to the businesses of the combined group, including ferries.”
A successful takeover would see P&O chief executive Robert Woods remain with the group to run the UK businesses and chair the struggling ferries division.
P&O chairman Sir John Parker said the decision to drop support for DP World was justified because PSA was willing to pay 6% more for control and had agreed to satisfy any regulatory demands.
He added: “P&O will be a strong owner for P&O’s businesses. We welcome their statement regarding the role of P&O’s management and employees will continue to play in the ongoing success of the new group.”
Temasek is run by Ho Ching, the wife of Singapore Prime Minister Lee Hsien Loong.
As owner of the Port of Singapore Authority, it is the second biggest ports group in the world.
The company was tipped in the City as a possible suitor for P&O because the combined operations would give it terminals at many of the world’s busiest shipping lanes.
According to reports, PSA already has tentative agreements with AP Moeller Group of Denmark and International Container Terminal Services of the Philippines to sell on assets which are not core to its strategy.
It is also thought to have held talks with APM Terminals, the world’s third largest ports operator. APM is said to be keen to acquire P&O’s assets in India and China, which provide access to the fast-growing economies of South East Asia.
DP tabled a bid worth 443p per share last year and was set for a clear run at P&O until PSA approached the board with a 470p-a-share offer earlier this month.
A foreign takeover of P&O would bring to an end 168 years of independence for the shipping brand, which carried cargo across the British Empire in its heyday.
P&O has 29 container terminals around the world, including at Southampton, and operates ferries across the Irish Sea, English Channel and North Sea.
References: EGi News 26/01/06
