Investment-Hungry Dubai to Pay $5.7 Billion for Operator of Ports
Dubai on Tuesday agreed to acquire Peninsular & Oriental Steam Navigation Co. for $5.7 billion to become the world’s third-largest port operator, gaining container terminals from Britain to China.
The acquisition, the largest by a Persian Gulf monarchy, would add to the $3.5 billion the emirate has spent on foreign assets this year to reduce its dependence on the region’s oil. DP World, Dubai’s port company, would trail only Hong Kong’s Hutchison Whampoa Ltd. and Singapore’s PSA International after the acquisition of Peninsular & Oriental, which was founded in 1837 to support Britain’s imperial expansion.
“Dubai has pots of money and they have been targeting the international ports business,” said John Lawson, an analyst in London at Investec Securities. “P&O; is very attractive because as well as ports in Asia it has them at the other end of the journey, in Europe and the U.S.”
DP World, which runs its domestic ports of Rashid and Jebel Ali as well as ports in Romania, Germany and India, paid $1.15 billion in December for CSX Corp.’s container terminals in Asia and South America.
Dubai’s $27-billion economy is booming on the back of record oil prices and a surge in real estate prices. The country is investing outside of oil and this year bought a stake in DaimlerChrysler, the world’s No. 5 automaker.
DP World said the acquisition meant that its ports would handle about 33 million 20-foot standard containers this year. Hutchison Whampoa, the world’s biggest port operator, handled 47.8 million in 2004.
Ports are taking advantage of an expansion in world trade, spurred as goods manufactured in Asia are exported to the U.S. and Europe.
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