The Peninsular and Oriental Steam Navigation Co. stated Tuesday it had agreed to be acquired by government-owned Dubai Ports World for $5.7 billion, ending more than 165 years of independence for the British shipping and port operator.
DP World offered $7.60 per P&O share in the deal that will make it the world's third largest ports operator in terms of capacity, up from its current rank as seventh largest. The combined company will operate 51 terminals in 30 countries.
DP World Chairman Sultan Ahmed Bin Sulayem said there was no overlap in the operations of the two companies and DP World did not plan to sell any assets. “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. The unparalleled strategic fit of the two companies’ complementary global ports portfolios and the strong development pipeline, including London Gateway, is particularly compelling. In addition, DP World regards the management and employees of P&O as key to the ongoing success of the combined entity. It is our current intention to keep P&O’s headquarters in London. DP World looks forward to growing the combined businesses for the benefit of employees, customers, and its shareholder.”
Sir John Parker, the Chairman of P&O, said: “We have today announced that the Board of P&O is recommending DP World’s all cash offer of 443 pence per share, which values the existing issued deferred stock of P&O at £3.3 billion. It represents a premium of 46 per cent. to the closing price of 303.5 pence on 27 October 2005 which was the last trading day prior to any market speculation, and represents 24.5x 2004 earnings.
“DP World’s offer recognises that P&O is a unique brand with an exceptional footprint of international port assets. P&O is one of the top four international port operators with 29 container terminals and operations in 18 countries across the globe, generating 80 per cent. of the Group’s total profits. The Board believes this all cash offer is in the best interests of the deferred stockholders who will receive a substantial return on their investments.
“P&O employees will also benefit. DP World have made clear they regard the management and employees as key to the ongoing success of the combined entity and that they recognise the importance of P&O’s ferries and properties divisions, as well as ports. I am pleased to say that it is intended that Robert Woods, Chief Executive of P&O, continues to head up the P&O business and for P&O to remain headquartered in London.
“Putting P&O and DP World together will create one of the top three leading ports groups in the world.”
