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DUBAI - State-owned Dubai Ports World yesterday said it had agreed to sell its US port operations to an American International Group unit after relinquishing control to allay concerns about US national security.
DP World will conclude its deal with AIG Global Investment Group in the first quarter, the Gulf Arab company's chief executive, Mohammad Sharaf, said yesterday. He declined to give a value for the deal.
DP World took over facilities at six major US ports when it acquired Britain's Peninsular & Oriental Steam Navigation Co for US$6.8 billion ($9.86 billion) in February, becoming the world's third-largest container port operator.
"We have reached a deal covering 100 per cent of the US assets," Sharaf said. "It will be a cash deal."
Jamal Majid Bin Thaniah, group chief executive of Dubai Ports and Jebel Ali Free Zone Authority, which includes DP World, in October told UK publication Lloyd's List the company expected the winning bid price to exceed a US$700 million valuation, or about 10 per cent of the total price it paid for P&O.
An AIG spokesman declined to comment on the price it had agree to pay for P&O's US port business.
Publicly traded US companies are bound to reveal the price of acquisitions if they are deemed material, or significant to their capital base.
AIG Global Investment Group, the asset management and private equity arm of American International Group, the world's largest insurer, has more than US$635 billion in assets.
At a price in the region of US$700 million, AIG would not come under disclosure requirements as it would for larger purchases.
AIG Global Investment Group has a track record of investments in various infrastructure businesses including power, waste and water operations, the spokesman said.
DP World agreed to sell its P&O facilities in New York, New Jersey, Philadelphia, Baltimore, Miami, Tampa and New Orleans after US lawmakers threatened to block the company, saying they feared giving a state-owned Arab company control of US port terminals would pose a threat to national security.
With a political firestorm threatening to become a diplomatic crisis, DP World announced it would sell P&O's US assets at the behest of Dubai's ruler, and hold them separately until a suitable buyer could be found.
"We don't expect any problems with this deal because AIG is an American company," Sharaf said.
P&O's US assets include dockworker operations at 16 locations along the eastern and Gulf Coasts and a passenger terminal in New York City.
"The price we received was fair," said DP World chairman Sultan bin Sulayem.
The forced capitulation of a Government-controlled company in the United Arab Emirates, a US ally and frequent port of call for American warships, reinforced Arab concerns that their US assets could be targeted for security reasons.
Some Arab investors said at the time that the row smacked of racism.
US critics of the deal, who included both Democrats and members of Bush's Republican Party, noted that two of the September 11 hijackers came from the UAE and that the country once recognised the Taleban Government in Afghanistan.
- REUTERS
