Dubai raises stakes for P&O

LONDON: Dubai has agreed to pay £3.88 billion ($9.87 billion) for Peninsular & Oriental Steam Navigation to top Singapore's bid for Britain's biggest port operator.

The price is 68 per cent more than the company was valued at in October.

"It's a generous offer," Sultan bin Sulayem, chairman of Dubai's port company, DP World, said yesterday after the agreement was announced. "We want to finish this deal very quickly."

The purchase of P&O - founded in the year Queen Victoria took the throne - would turn DP World into the world's third-largest port operator, controlling 29 terminals at ports from New Orleans to Manila, thwarting an effort by the Singapore port company to become the largest operator.

"P&O is a jewel in the industry and is of great strategic value," said John Lawson, an analyst in London at Investec Securities, with a "hold" rating on the stock. "But we're in new territory when it comes to valuation,"

DP World agreed to pay 520 pence a share for P&O, beating an earlier bid of 470 pence by PSA International, Singapore's largest port company.

P&O switched support to DP World from PSA in less than 12 hours. Temasek, the Singapore Government's investment company, owns PSA.

London-based P&O said it would put DP World's offer to investors on February 13, and that PSA would have to indicate an intention to offer more than 546 pence a share by then for the meeting to be postponed.

A spokesman for PSA, David Trenchard, declined to comment.

The £4.1 billion offer PSA needs to make to remain in the contest is 76 per cent higher than P&O's value on October 28, the last trading day before the company said on October 31 that it had been approached by DP World.

The last battle between the two Government-owned operators suggests they are attaching more value to port assets, as PSA seeks control of terminals outside Singapore and Dubai tries to cut the dependence of its economy on oil revenue.

DP World in December 2004 paid CSX US$1.15 billion for terminals in Hong Kong and South America, outbidding PSA.

- BLOOMBERG