DP World waits for second bite at U.S. market
Dubai Ports World, the United Arab Emirates company that said it would relinquish control of recently acquired port terminal operating rights in the United States in the face of intense opposition from Congress, still holds out hope to save the deal and remain in the U.S. market, Chief Executive Mohammed Sharaf said Wednesday.
“Once (the) process is changed and new legislation comes in, then we are ready to go back,” Sharaf said in an interview with Agence France-Presse. “It all depends on the Americans, what sort of legislation they will come up with ' This is the world’s largest economy. How can you just ignore it?”
DP World is in a form of hibernation in the United States since it acquired British ports operator Peninsular and Oriental Steam Navigation Co. in March for $6.8 billion. The Bush administration approved the deal, but Congress vowed to block the deal because of concerns about a foreign government operating sensitive port facilities and Dubai’s murky record in dealing with terrorists and smuggling. To quell the controversy, DP World said it would sell the company to a U.S. entity, but is drawing out the process through a lengthy and formal bid solicitation for the 22 terminal and cargo handling businesses it now owns and quietly operates in the United States. DP World made it clear that a condition for selling P&O’s North American business is that the company not lose any money from the transaction.
Several efforts are underway in Congress to reform the process that reviews foreign investments for national security risks. Lawmakers criticized the Committee for Foreign Investment in the United States (CFIUS), a multi-agency panel, for not thoroughly examining DP World’s record on terrorism and whether it posed a security threat.
Proposals in the Senate would require CFIUS to evaluate foreign acquisitions based on rankings of a country’s support of counter-terrorism operations, nonproliferation agreements and export control laws. The Senate bills also call for state governors to be notified about potentially risky deals in their state and for the Department of Homeland Security to take over heading the security reviews from the Treasury Department.
House leaders are taking what is seen as a more business-friendly approach to improve the process without scaring off foreign investors. However, Rep. Duncan Hunter of California also is pushing a bill that would require DHS and the Defense Department to list critical infrastructure facilities and American-owned companies to operate them. Foreign companies now in control would have to divest their stakes. Many proposals in both houses call for greater congressional oversight of approvals for foreign investments, something many business leaders oppose because foreign investors do not want all their corporate practices aired in public.
Sharaf said the decision to back out of the U.S. market was a “temporary setback.” The company plans to reapply for permission to operate in the United States once Congress completes the new investment rules, he said.