DP World sells U.S. terminals to AIG

DP World sells U.S. terminals to AIG Dubai Ports World said Monday it has sold its P&O Ports North America marine terminal business to insurance and investment services giant AIG, nine months after acquiring the unit and becoming embroiled in a political firestorm over national security.
   The news ends months of speculation about potential bidders, which several business publications said included partnerships between private equity investor the Carlyle Group and U.S. marine terminal operator SSA Marine, and between investment bank Morgan Stanley and French liner carrier CMA CGM.
   P&O Ports operates terminals in five major East Coast ports, including Miami and the Port of New York-New Jersey, as well as stevedoring businesses in 16 ports on the East and Gulf coasts.
   Recent investor interest in the infrastructure sector, and container terminals in particular, has heated up the market and driven up prices that buyers are paying to manage port operations.
   DP World did not disclose the price of the P&O sale to AIG, but had been seeking in excess of $750 million. Terminals have recently sold at multiples several times their actual value. The Ontario Teacher’s Pension Plan recently agreed to buy four terminals in Canada and the United States from the Hong Kong-based parent company of container shipping line OOCL, Orient Overseas (International) Ltd., for $2.35 billion. The price is at least 20 times above earnings before interest, taxes, depreciation and amortization — a key benchmark used to assess a company’s value.
   Assuming similar multiples, DP World could be expected to fetch at least $800 million.
      DP World Chairman Sultan Ahmed Bin Sulayem said in a statement that the company received a 'fair' price for the U.S. business.
   'While we are disappointed to be exiting the U.S. market, the price we received was fair,' he said.
   The global terminal operator owned by the government of Dubai was forced to divest its U.S. port business after lawmakers learned that the Bush administration had quietly approved the deal and threatened to block the sale because of concerns that port operator could be infiltrated by terrorists. Members of Congress pointed to evidence that some of the Sept. 11, 2001 hijackers used the UAE as a conduit for planning their attacks.
   The emir of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, decided to back out of the U.S. market to prevent further damage to relations with the United States. The company, which has owned P&O Ports North America since acquiring it as part of the $6.8 billion takeover of Peninsular and Oriental Steam Navigation Co., promised to sell the subsidiary to an U.S.-owned company.
   'With the sale of the U.S. assets, we have concluded the process and our commitment to the American people that we began in March, said Mohammed Sharaf, DP World’s chief executive officer. 'Meanwhile, we continue to expand globally in response to our customer's needs.'
   Deutsche Bank handled the sales process for DP World.
   AIG Global Investment Group provides investment advice and services, including managing about $540 billion in private equity, real estate and stock market assets for its clients.
   The AIG subsidiary has an infrastructure fund that has been acquiring large, regulated infrastructure businesses.
   'We have identified the marine terminals sector as a key element in our infrastructure investment strategy, and we believe that POPNA is one of the leading operators in this sector in the United States,' said Group Managing Director Christopher Lee. 'We are pleased to partner with the company’s management team to continue delivering the highest standards of security, safety, integrity and operational reliability to the company's key constituencies. This includes a particular commitment to port authorities and carrier clients and employees.
   'An integral component of this acquisition is our full commitment to the importance of this company to national security, and we are committed to ensuring that the company continues to be one of the industry leaders in setting standards for port security,' he said.