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American Shipper

Sale process accelerates for DP World’s U.S. port business

Sale process accelerates for DP World’s U.S. port business

   Deutsche Bank has begun this week to send out financial statements about Dubai Ports World’s U.S. container terminal and stevedoring assets to almost 100 interested buyers, clearing the way for a tentative agreement to sell the P&O Ports North America business by late August or early September, according to an industry source close to the situation.

   DP World, owned by the government of Dubai, acquired London-based Peninsular and Oriental Steam Navigation Co. in March for $6.8 billion. It agreed to divest the U.S. part of the deal after running into fierce opposition in Congress, which threatened to block the deal over fears that terrorists could infiltrate the company to attack U.S. ports or facilitate smuggling of mass destruction weapons into the country. Most security and industry experts dismissed that possibility, but the political debate in the United States became so heated that the emir of Dubai decided the bad publicity was not worth trying to hold onto the U.S. assets.

   The sale process has been slowed by difficulties in consolidating the financial figures for nearly two dozen separate P&O subsidiary companies that operate container terminals, or carry out passenger and cargo handling, in the United States and listing the assets according to generally accepted accounting principles related to mergers and acquisitions. Some industry observers had expected Deutsche Bank, DP World’s financial advisor, to make the financial books available to potential bidders by mid-April or May. The delay led to speculation that DP World was not really interested in selling the P&O business, as it had promised.

   The source said that Deutsche Bank is sending out the financial books to parties that have signed agreements to keep the material confidential. The book includes financial statements and projections about P&O’s earnings potential.

   Initial offers in typical merger and acquisition activities are frequently made within a month of receiving financial information. Entities that are serious about placing a bid may conduct extra due diligence through site visits or meeting with management of the company that is up for sale.

   A mix of maritime terminal and transportation operators, private equity consortia and infrastructure funds such as those managed by Australia’s Macquarie Bank and Goldman Sachs are believed to be interested in the P&O business.

   The Financial Times first reported about the accelerated movement in the P&O sale process.

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