For Sale: Waterfront property owned by Dubai
The Dubai-owned ports management company caught in the political storm over its effort to control terminals and cargo handling at several U.S. ports said Wednesday it plans to sell the U.S. facilities within four to six months to an “unrelated U.S. buyer.”
Dubai Ports World threw in the towel last week amidst stiff opposition in Congress and said it would transfer to a U.S. entity the domestic operations it acquired March 8 as part of a $6.8 billion deal for the global port business of Peninsular and Oriental (P&O) Steam Navigation Co. The news raised questions about whether DP World planned to make a full divestiture or set up a U.S. subsidiary with ties to a shell company controlled by DP World.
The company said its financial adviser, Deutsche Bank, will invite interested parties to bid for P&O Ports North America.
“Offers will be assessed by reference to value, deliverability and the continuity of management, employees and customers. In parallel with this sale process, discussions will take place with port authorities, joint venture partners and labor representatives to facilitate a smooth transition of the business to a new owner,” the statement said.
Deutsche Bank has begun preparing financial, corporate and legal documents about the business for prospective buyers to review.
DP World said it hoped to reach agreement with a new buyer within four to six months, depending on cooperation from port authorities and joint venture partners.
One of those partners, Eller & Co., is locked in a legal dispute with P&O over ownership changes in a terminal at the Port of Miami, and has played a central role in trying to derail the DP World acquisition.
The news seemed to satisfy lawmakers who were determined to kill the deal.
“It now seems clear that this deal has finally been scuttled and it is good news for keeping our country secure,” said Sen. Charles Schumer, D-N.Y., in a statement. “This announcement, once it is fulfilled, is exactly what we’ve been asking for. We will keep a watchful eye and our legislation at the ready until this deal is finally done.”
Still unclear, however, is whether the U.S. government will be the buyer of last resort or help finance a deal. DP World has said any sale must ensure that it doesn’t lose money from its recent transaction. Company officials and analysts have placed the value of P&O Ports North America at about $700 million, based on the sale price of the parent company and the fact that U.S. operations only accounted for about 6 to 10 percent of its profits. DP World paid a 20 percent premium in a bidding war for P&O, according to analysts. Private sector buyers could balk at paying an inflated price for the P&O operations in 22 East and Gulf coast ports.
DP World has some leverage in the situation because the U.S. government, through an executive branch review panel, issued the company formal approval to proceed with the sale before Congress found out and threatened to stop the deal.
P&O Ports North America will continue to be independently operated as previously promised, DP World said.