Does anybody know more ?

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Dubai 'poised to make £3b buyout bid for P&O ports'
Staff Report
October 31, 2005

Dubai: Dubai Ports World, the world's sixth-largest port operator, is set to make a £3 billion bid this week to take over P&O, Britain's biggest ports and ferries group, the Sunday Times News Service reported from London yesterday.

The news service said Dubai Ports World (DPW), owned by the Dubai government, had hired Deutsche Bank to advise it on a bid.

It quoted banking sources in Dubai as saying on the weekend that a preliminary meeting between the two sides was likely to take place within days.

Dubai Ports had contacted banks about financing a bid for the British ports operator. A stock-exchange announcement confirming its interest may be made today, it added.

Both, Dubai Ports and Deutsche Bank, said they had no comment to make.

DPW, formed only a month ago from the combination of the Dubai Ports Authority and Dubai Ports International, has interests spanning 15 terminals across 13 locations.

It is keen to acquire P&O to strengthen its position in the rapidly consolidating global ports industry. P&O owns 27 container terminals and had logistics operations in 18 countries. It also has port operations in Africa and Australia as well as operations in India, the Philippines and Sri Lanka.

The news service said that an approach from DPW was almost certain to set off a bidding war for P&O, with Temasek, the Singaporean state investment firm, and Danish shipping group AP Moeller-Maersk among other likely predators.

Dubai Ports World is expected to try to persuade P&O's management that the long-term investment required for modern port development would be best done by a private rather than a quoted group.

A takeover would mark the end of a long restructuring process at P&O which has included the disposal of its 25 per cent stake in the shipping firm P&O Nedlloyd, its golf-club and exhibition-centre assets, and the sale of its refrigerated logistics arm.

The future of P&O's ferries business has also been the subject of speculation in recent months.

Earlier this year, Dubai Ports International paid $1.142 billion in cash, before working capital and long-term debt adjustments, to buy the international terminal business of CSX.

Gulf News

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There will be some shake-up also on that front, then,.

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P&O Shares May Advance After Approach From Dubai Ports Company
October 31, 2005

Shares of Peninsular & Oriental Steam Navigation Co., the U.K.'s largest ports operator, may rise after the Dubai government approached the company about a takeover.

DP World, a ports company owned by the Persian Gulf emirate, is in talks to buy P&O, people familiar with the negotiations said. The company has a market value of 2.3 billion pounds ($4.1 billion). In a statement yesterday, P&O said it had received "a very preliminary contact" from a company it didn't identify.

"Ports are a growth business on a global scale," said Stuart Fraser, a director at Brewin Dolphin Holdings in London, which oversees $30 billion. "For Dubai it would be a strategic investment for the long-term."

DP World, formed by the merger of Dubai Ports Authority and Dubai Ports International, is expanding in Asia, India and the Middle East to tap rising trade volumes. London-based P&O, founded in 1837, now relies on its Asian ports for more than 50 percent of its volumes.

Shares of P&O rose 6.75 pence, or 2.2 percent, to 310.25 pence on Friday, Oct. 28, in London. They have climbed 4.3 percent this year. The company had net debt of 660.6 million pounds at the end of June.

DP World hired Deutsche Bank AG to advise on a possible 3 billion-pound bid for P&O and approached several lenders for financing, the Sunday Times reported yesterday, citing unidentified bankers in Dubai.

Sultan bin Sulayem, chairman of the Dubai Ports and Free Zones, the government-operated entity that owns DP World, and Mohammed Sharaf, chief executive of DP World, declined to comment when reached on their mobile phones. Sharaf is in London. A P&O spokeswoman, who declined to be identified, refused to comment on whether the bid approach came from Dubai.

Dubai Acquisitions

Dubai, a member of the United Arab Emirates, has spent at least $3.5 billion this year on foreign assets, including a stake in DaimlerChrysler AG and Tussauds Group. Persian Gulf economies are booming on record oil revenue expected to reach $305 billion this year.

P&O, which was founded to transport mail and goods between the U .K. and Spain, also runs ferries between the U.K. and France. The company had 1.35 billion pounds of revenue and net income of 220.1 million pounds in the first half.

P&O's Asian ports, located in China, India, the Philippines and Pakistan, accounted for 44 percent of the containers it handled in the third quarter, and made up 58 percent of the total so far this year. P&O first shipped goods to Asia in the 1850s.

Cash Rich

DP World, with origins dating to 1972, last year acquired terminal operations in Hong Kong, China and other countries from CSX Corp. for $1.15 billion as part of a plan to more than double capacity to 20 million containers a year, bin Sulayem said in an interview at the Dead Sea in Jordan, on May 20.

"Banks in the U.A.E. are awash with cash at the moment and its not surprising they can raise this kind of money" to buy P&O, Anthony Harris, a former U.K. ambassador to the United Arab Emirates, said in a telephone interview.

The company, which handled 8 million containers in 2004, beat Whampoa Hutchison and PSA International to CSX's operations. P&O handled 13.8 million containers in 2004 and has unloaded 10.9 million in the first nine months of 2005.

London-based P&O exited the shipping business and has sold more than 300 million pounds of property this year to focus on expanding its ports business, which includes operations in Antwerp, Le Havre and the U.K.

P&O is awaiting final permission from the U.K. government to develop a port at Thurrock on London's river Thames that is planned to handle about 3.5 million containers a year and cost about 800 million pounds to build.

Trade Increases

Port operators around the world are benefiting from an increase in volumes of trade, which are forecast to swell by 7.4 percent this year and 7.6 percent in 2006, according to the International Monetary Fund.

PSA handled a record 33.1 million containers last year, 15 percent more than in 2003. Hutchison's 39 ports worldwide handled 15 percent more containers last year.

Deutsche Bank AG is advising DP World. Citigroup Inc. and Morgan Stanley are P&O's corporate brokers.

Bloomberg

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Port giants jostle for position in P&O takeover battle
November 2, 2005

THE stage has been set for a potential takeover battle for P&O between AP Moller-Maersk, the Port of Singapore and Dubai Ports World, after the fist two displayed signs of moving to block the interested Dubai party from acquiring the world's fourth largest international container port operator.

With a bidding war brewing, the value of P&O's stock is widely expected to rise further, after news of a takeover approach by Dubai Ports World lifted its share prices by 30 per cent on October 31.

Analysts forecast that as there is a great deal of interest in the UK port operator in the market, the takeover bid could be valued at between GBP3 billion (US$5.3) and GBP3.7 billion, said a report from The Times of London.

The report added that discussions between UAE-based Dubai Ports World and P&O, which were said to have started last week, were at a very early stage at a time when world trade with China is booming making the ports business, with special emphasis in Asia, a highly prized asset.

Maersk has declined to comment on whether it is considering launching a counter bid, according to The Times. Likewise, Temasek, the investment arm of the Port of Singapore is also keeping its lips sealed for the time being on the matter.

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P&O sells off cold storage arm as takeover verdict hangs in balance
November 3, 2005

SHIPPING giant P&O yesterday confirmed the sale of its cold logistics business for £183m as it continued to weigh up a multi-billion pound takeover approach.

The ports and ferries operator - which received a bid approach at the weekend from a party thought to be Dubai Ports World (DPW) - struck the deal with Canada's Versacold Holdings.

But a further break-up of P&O, which operates ferry routes between Liverpool and Dublin, looked unlikely as latest reports said that DPW would keep the ferries business if it was successful with its bid.

P&O Cold Logistics is the third-largest cold storage and distribution operator in the world, with 3,000 employees around the world.

Chief executive Robert Woods said: "As P&O continues to focus on its fast-growing international ports business, it is time to look to another owner to take the cold logistics business to the next stage."

P&O - The Peninsular and Oriental Steam Navigation Company - was founded in 1837 and is one of the most iconic names in British business. It is currently worth £3.13bn.

The prospect of a bidding war sent its shares 30% higher on Monday to 400p.

Liverpool Daily Post

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Toll to consider P&O
Geoff Easdown
November 3, 2005

TRANSPORT titan Paul Little said last night his Toll Holdings group might bid for P&O's Australian waterfront business if the $4 billion takeover offer for Chris Corrigan's Patrick Corp collapses.

"P&O assets certainly would be something we'd look closely at if the offer for Patrick isn't successful," Mr Little said yesterday.

The chief executive of Melbourne-based Toll said Patrick Corp was Toll's preferred target, but he would look closely at P&O's assets if Patrick was not available.

Mr Little's comments were dismissed later by Patrick Corp spokesman Paul White.

He repeated comments Patrick managing director Chris Corrigan made after P&O rejected overtures from Toll and Patrick 18 months ago.

At that time Mr Corrigan was reported as saying: "We always thought that Paul Little had been taken in hook, line and sinker by the John Wylie (the principal of merchant banker Carnegie Wylie) mirage. We only went along with it (the first P&O offer) to make sure it was as it appeared to be, completely ridiculous," Mr Corrigan had said.

Mr White said that, at that time, Toll wanted P&O's Australian waterfront business and Patrick was to get other companies outside Australia.

Yesterday, Mr Little's renewed interest in P&O appeared to have been sparked by weekend reports that the $7.14 billion was on the auction block, and that Dubai Ports World, a stevedoring business linked to interests associated with the Saudi royal family, was poised to make an offer.

P&O competes against Patrick in Australia.

Mr Little said Danish shipping firm AP Moeller-Maersk was also reportedly interested in P&O.

Toll would talk to both Dubai Ports and AP Moeller to find out if they wanted to retain P&O's Australian port assets should one of them take over P&O.

Mr Little said Toll did not have any container stevedoring capability at the moment so acquiring assets in that area should not raise competition concerns with the Australian Competition and Consumer Commission.

Toll's bid for Patrick has been flagging because shares in the country's largest transport and logistics business have fallen and stripped almost $500 million in market value from the company since the bid was launched 10 weeks ago.

Toll yesterday extended the mainly scrip offer from the previous closing date of November 10 until December 2.

Mr Little said the extension would allow greater clarity around some of the issues related to the bid, particularly any competition concerns that might be raised by the ACCC, which is due to report on the bid on November 14.

Toll said its offer was "the only and best bid on the table".

Mr Little said the potential sensitivities of the ACCC in relation to Toll's proposed takeover of Patrick were not in the area of ports but in rail and (coastal) shipping operations.

Toll yesterday also issued a supplementary bidder's statement for Patrick, in which it claimed "numerous deficiencies" in Patrick's target's statement.

It said these included Patrick's failure to provide details on how it expected to expand its freight forwarding and express freight operations should it not be taken over by Toll.

Patrick had also not provided any information on current gearing and forecast cash flows, and a valuation of Patrick shares by Lonergan Edwards & Associates was inflated and did not stand up to scrutiny, according to Toll.

Toll said a proposed $1.5 billion expenditure program by Patrick might add to the company's earnings but would not necessarily add economic value for shareholders after taking into account the need to generate an appropriate return on new capital invested.

Toll added that Patrick's financial forecasts relied on the Pacific National rail operations, which are jointly owned by Toll and Patrick, continuing in their present form.

Patrick shares closed down 2 to $6.77 and Toll scrip rose 2 to $12.55.

Herald Sun

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Hutchison Ports said to be eyeing P&O
Also keen: Dubai Ports World, AP Moeller, Temasek
November 8, 2005

(SINGAPORE) There has been more speculation on prospective bidders for Britain's venerable P&O company, with the Hong Kong media being the latest reporting interest from Hutchison Ports, the largest port operator in the world.

Reports in Hong Kong and British newspapers said that Hutchison entered the fray after Singapore investment company Temasek, which owns PSA International, and the Middle East's biggest terminal operator, Dubai Ports World, showed interest in P&O.

Danish shipping giant AP Moeller is also believed to be eyeing a bid.

The South China Morning Post quoted a Europe-based Hutchison source as saying it was time to make a move.

'It appears the shareholders are finally willing to sell,' the source was quoted as saying. 'We haven't denied we were in the running in the past and we haven't lost interest.'

Meanwhile, UK's Financial Times, which first broke the story on Dubai's interest in P&O, said in another report yesterday that Singapore's Temasek has appointed UBS to advise it on a potential takeover for the UK port and ferries group that is valued at slightly more than 3 billion (S$8.9 billion).

The move is likely to fuel speculation that a bidding war could erupt for P&O, Britain's only listed global ports operator, the London financial daily said.

In Singapore, both UBS and Temasek offered no comment when asked to confirm or deny the reports.

P&O, founded in 1837 to transport mail from Britain to Spain and Portugal, has exited the shipping business, sold property and cut costs at the ferry division this year to focus on making its 27 container-terminal operations more profitable.

Hutchison, run by Asia's richest man Li Ka-shing, is said to be prepared to bid up to 4 billion for the British port company, the world's fourth largest terminal operator.

The news coincided with reports that Hutchison had been barred from bidding for a lucrative Indian project by a Delhi government fearful of Chinese influence over strategic industrial sectors.

The firm had been shut out from bidding to build a US$270 million offshore container terminal near Mumbai 'because of its Chinese connections', the Financial Times reported, citing senior sources at India's ports authority.

Taiwanese transport company Evergreen also lost out after failing to win a security clearance for the project for similar reasons as Hutchison, the report said.

It quoted Evergreen as saying it was 'surprised and upset' but was trying to communicate with the Indian authorities to clarify that Evergreen was not a Chinese enterprise.

The FT noted that Hutchison had suffered a similar rebuff in India about a year ago when Indian authorities removed it from a short-list of candidates bidding to operate a terminal at Jawaharlal Nehru Port in Mumbai.

It said Evergreen had also encountered security concerns when it was bidding for contracts there last year and five years ago but had managed to obtain a clearance.

P&O handled 13.8 million containers last year, making it the fourth-biggest port operator.

Hong-Kong-based Hutchison Whampoa ranked first with 47 million containers, Singapore-based PSA was second with 32.5 million units and Copenhagen-based AP Moeller-Maersk's terminal business was third.

Terminals in Asia accounted for 58 per cent of the 83.2 million of operating profit P&O's ports business generated in the first half compared with 10 per cent from the European ports in Southampton, on the southern English coast, and Antwerp, Belgium.

AFP, Bloomberg

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P&O close to agreeing takeover by Dubai Ports World
By Peter Klinger
November 26, 2005

P&O WAS last night thrashing out an agreed takeover by Dubai Ports World that would value the 165-year-old British ports and ferries group at more than £3.2 billion.

It is thought that an agreed deal could be announced as early as next week, although neither side would comment on the negotiations.

P&O’s shares closed at 438p yesterday, up 7¾p, but still well short of the rumoured 460p cash bid figure from Dubai. P&O’s shares were trading at around 300p before the bid speculation first emerged a month ago.

One City analyst said: “I think to say that 460p would guarantee success (for the bidder) sounds plausible. They (P&O) have known for years that they are sitting on a pot of gold and that this would be hugely attractive to someone.”

P&O’s decision to enter into talks with Dubai Ports World effectively seals its end as an independent company. Although a deal is not guaranteed, the talks reflect the P&O board’s concession that their company cannot continue to stand alone in the face of cash-rich suitors such as Dubai Ports World.

It remains unclear whether several of the other mooted suitors — the Hong Kong-based Hutchison Ports, Temasek, of Singapore, and AP Moller- Maersk, of Denmark — would be prompted to enter the fray once Dubai Ports World formally launches an offer.

However, any Dubai Ports World bid is likely to include a substantial break-fee payable to the Middle Eastern suitor should P&O attract a rival, higher bid.

Despite P&O’s rich British history, it is its global suite of port assets, in particular in Asia, that have made it such an attractive takeover target. P&O is the fourth-biggest global container port operator in the world and one of the few companies with an open share register.

Soaring world trade, especially between China and the West, has revived the fortunes of ports companies. P&O has more than half of its assets in Asia and could increase its capacity from 15 million TEU (twenty feet equivalent unit) to 33 million TEU in the next few years, including a huge new port on the Thames Gateway.

Observers have pointed to the credentials of Sir John Parker, P&O’s chairman, who in the past has been successful in achieving substantial bid premiums for other companies.

Times Online

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P&O agrees bid from Dubai Ports
November 29, 2005

Ports and ferries group P&O has agreed to be bought by Dubai Ports World in a takeover deal worth £3.3bn ($5.7bn).

P&O said in a statement that Dubai Ports (DP World) had offered 443 pence per share in cash for the company.

Last month, P&O announced that it had been approached by a potential bidder and speculation mounted that Dubai Ports was behind the talks.

The takeover signals the end of 168 years of independence for the world's fourth-largest ports group.

DP World, owned by the Dubai government, said it planned to keep P&O's headquarters in London and chief executive Robert Woods would continue to head the business.

There are unlikely to be any job cuts as P&O will be run as a separate business, DP World says, as there is very little overlap between the operations of the two companies.

P&O's pension fund, which currently has a deficit of £200m, will be protected through a one-off cash injection of £125m by DP World, followed by further payments over the next five years.

Shares in P&O closed up more than 1% at 439.5 pence at the close of trade in London on Tuesday.

'Attractive proposition'

Founded in 1837, P&O has three divisions - ferries, ports and logistics. In its heyday in the mid-1920s, it owned a fleet of almost 500 ships before transforming itself in the post-war era to concentrate more on cargo shipping and ports.

P&O has also dipped its toes in a number of sectors outside shipping in its history.

A brief foray into oil exploration took place in the 1970s and P&O once owned Bovis Homes and the Earls Court & Olympia exhibition centres.

Its cruise division - P&O Princess Cruises - was demerged in 2000 and later bought by Carnival. Earlier this year, it sold its stake in container shipping division Royal P&O Nedlloyd for £381m.

Currently, the group is on the verge of winning planning permission for a £1.5bn ports development in the Thames Gateway.

Rival bid?

Though P&O was not actively looking for a takeover bid, the offer proved too attractive to resist.

"We did not solicit the bid but we received an attractive proposition. It was followed by some very tough negotiations," said P&O chairman Sir John Parker.

"Putting P&O and DP World together will create one of the top three leading ports groups in the world."

The offer price represented a 46% premium to P&O's price before 30 October when P&O confirmed it was in talks. News of the potential bidder sparked a 30% rally in its share price on hopes that the approach could trigger a bidding war.

Denmark's Moeller-Maersk, Singapore government investment agency Temasek Holdings and Hong Kong's Hutchison Whampoa were named in the press as potential rival bidders for P&O.

However, no rival bids have emerged so far.

Asian expansion

DP World is one of several Dubai government-linked firms looking for assets to invest in, backed by huge cash piles from the Gulf emirate's resources.

Ports are currently reaping the rewards of an expansion in world trade, as goods made in Asia find their way to the US and Europe.

World trade volumes are expected to grow 7.6% in 2006, according to the International Monetary Fund (IMF).

Dubai Ports said it hoped to expand its operations following the P&O deal.

"Asia, in particular India, is an opportunity ... as well as Europe," DP World chairman Ahmed Bin Sulayem told reporters on a conference call.

BBC News

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P&O ports face carve-up as Singapore builds stake
Oliver Morgan, industrial editor
The Observer
December 4, 2005

Singaporean investment group Temasek is planning a carve up of P&O's ports business, which would involve splitting its 27 container terminals with Dubai Ports World.

By close of play on Friday Temasek had bought more than 5 per cent of P&O, prompting speculation that it was preparing to bid for it.

But sources close to the deal said that a bid was not on the agenda. Instead, Temasek appears to be building up a stake in order to create a bargaining position over P&O's prime assets in Asian growth markets.

Sources suggested that if they were going to launch a counter-bid they would probably not do it that way. They added that there were two other options - either trying to get a blocking stake to stop another bidder, or trying to carve up the company in a negotiation for assets.

P&O has already agreed a £3.3 billion takeover from DPW, the state-owned ports business founded in 1976 by Sheikh Rashid al Maktoum, then ruler of Dubai and father of the current premier.

A successful DPW bid would create one of the biggest container ports operations in the world, ranking near Hong Kong's Hutchinson Whampoa and AP Moller Maersk of Denmark, both of whom have been named as potential counter-bidders.

Temasek's spree pushed P&O shares up to 494p, well above the 443p offered by DPW.

There has been speculation that the Singaporeans would put in a counter-bid ever since negotiations between DPW and P&O were revealed last month.

The Singaporeans are unlikely to be interested in P&O's terminal at Antwerp, which could be an opening for negotiation with DPW.

With industrial expansion in China, India and elsewhere in Asia driving an increase in global freight volumes, P&O's strong portfolio of terminals in Asia is regarded as its most attractive asset.

Cash-rich Temasek, advised by UBS, is looking to expand aggressively into China. Earlier this year it announced it was negotiating to buy a 10 per cent stake in Bank of China, alongside Royal Bank of Scotland, led by Sir Fred Goodwin.

Guardian Unlimited

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Temasek's P&O stake fuels counter-bid talk
By NEIL BEHRMANN
IN LONDON
December 5, 2005

INVESTMENT bankers are speculating about Temasek's strategy now that it has begun building a sizeable stake in P&O, the UK ports and ferry operator.

Some sources believe that Temasek ultimately intends embarking on a move to outbid Dubai Ports World's (DPW) agreed offer to buy P&O for 3.3 billion (S$9.7 billion) in cash.

Others believe that the Singapore company intends to have a major say in P&O's future business plans. Temasek, which owns PSA, the Port of Singapore Authority, announced last Friday that it had built up a 3.2 per cent stake in P&O.

The shares were acquired at a price just under DPW's 443 pence a share offer for P&O. Speculation about a possible Temasek counter-bid was rife as brokers reported that there were further purchases, leading them to believe that the Singapore conglomerate's holding has risen to around 4.5 per cent.

P&O's price closed at 494 pence, an 11 per cent increase last Friday as hedge fund arbitragers and other investors joined in and bought shares. Temasek executives and P&O wouldn't comment. In Singapore, Temasek spokeswoman Eva Ho said 'we have no comment', when asked about Temasek's intentions.

P&O chairman John Parker said last Tuesday the company had had no talks with potential rival bidders such as Temasek.

But the London Sunday Times reported that 'sources close to Temasek' said the company wants to accumulate a holding of at least 10 per cent. This would be sufficient to prevent DPW from taking outright control of P&O. By increasing its stake, Temasek could be in a powerful position to have a say in DPW's plans to finance and restructure P&O.

Temasek is being advised by UBS and will not buy P&O at any price, the sources indicated. The intention is to build up a stake gradually. Temasek has been mentioned before as a possible counter-bidder for P&O and in the past six years it has made a series of tentative approaches to the company, claims the Sunday Times. According to the Financial Times, the investment agency 'is understood to have looked seriously at bidding for P&O last May' but decided against it. 'People familiar with Temasek's strategy indicated that the company would not make a full-scale bid,' the FT report said.

To block the agreed DPW cash bid, Temasek would have to hold 25 per cent of P&O shares. But Temasek sometimes built up sizeable stakes in companies to disrupt agreed bids without making a full offer, claimed the FT sources. They believe Temasek could use its position to negotiate asset sales or joint ventures with P&O and DPW in Asian ports.

If Temasek made a bid that was eventually accepted, P&O would have to pay DPW a 34 million fee for breaking the agreed takeover deal.

Business Times

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Singapore port operator PSA confirms bid for shipping company P&O
January 11, 2006

SINGAPORE: Singapore port operator PSA International confirmed Wednesday it has bid for British shipping company Peninsular & Oriental Steam Navigation Co., a move that will pit it against a rival bid from Dubai Ports World.

"PSA International confirms that it has made an approach to The Peninsular and Oriental Steam Navigation Company (P&O),'' a PSA statement said, without providing details.

The Singapore government's investment arm Temasek Holdings, which owns PSA, declined comment.

P&O said in a statement Tuesday that PSA may make an offer for the company at 470 pence (US$8.28; euro6.86) per share, or around 3.54 billion pounds (US$6.24 billion; euro5.17 billion).

P&O had said in November it agreed to be acquired by government-owned, Dubai-based DP World, which had offered a bid worth US$5.7 billion, ending more than 165 years of independence for the British shipping and port operator.

In Tuesday's statement, P&O said the PSA proposal did not amount to a firm intention and was subject to the completion of due diligence, board approval from PSA and the P&O board withdrawing its recommendation for DP World's bid.

P&O said it will allow PSA a limited period of time to satisfy its conditions and put forward a formal offer.

Founded in 1837, P&O carried cargo throughout the British empire to Sydney, Calcutta, Singapore, Hong Kong and other colonies in its heyday.

The addition of P&O's 29 ports around the world would help Singapore's PSA, the second-biggest container port operator in the world, to gain ground on leader Hutchison Whampoa of Hong Kong.

AP

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P&O buoyed by bids
January 14, 2006

P&O shareholders have had a happy start to the new year. They find themselves with two state-owned port operators fighting for ownership of the UK group.

The offer by Dubai Ports (DP) of 443p a share in cash – already recommended by the board before last week’s rival bid from Singapore – values P&O at 13 times this year’s profits before ebita. Port of Singapore Authority (PSA), a unit of the state-owned investment company Temasek Holdings, has indicated (subject to satisfactory due diligence) that it will offer 470p a share, which pushes the rating to 14 times.

In both cases these are not outlandish ratings for one of the world’s leading ports operator and one both bidders are anxious to keep out of competitors’ ownership. DP’s bid values P&O at £3.3bn, while PSA’s initial approach puts the figure at £3.53bn. Apart from price, there is little else to differentiate the two offers and it is a certainty that DP will now offer higher terms.

Some brokers believe the bidding could go to 500p a share, or even 550p, for a company whose stock was trading as low as 263p in early summer last year. Since November’s offer from DP, P&O’s shares have been trading at above its offer with investors betting – rightly as it has turned out – that at least one other bidder would emerge. PSA’s advisers are rushing to get due diligence completed and P&O has postponed by two weeks the extraordinary general meeting it had planned for 20 January to approve the bid from DP.

By containers handled, P&O is the world’s fourth-largest operator (with 6.1% market share) operating 29 ports worldwide. PSA is second with 9.2%, and the third-largest is APM Terminals (8.9%), the port operating arm of AP Moeller-Maersk of Denmark. A P&O/PSA merger would make the merged group the world’s largest operator, whereas a merger between DP and P&O would produce the world’s ­second-largest. Whether AP Moeller-Maersk or Hutchison Ports – part of Li Ka-Shing’s Hutchison Whampoa business empire and the world’s largest ports operator (with 13.3%) – will enter the fray is uncertain, but both will not be comfortable seeing a rare prize in the ports sector coming under the control of a competitor.

DP and PSA have locked horns in the past. In 2004, DP outbid PSA for the global ports assets of CSX Corporation of Jacksonville, Florida. It is not Hutchison’s style to enter expensive bidding wars.

P&O shareholders need do nothing for now but sit back, relax and dream of the cruise they will be able to afford when their ship comes in.

The Business Online

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PSA unlikely to break P&O if it wins bid - paper
January 16, 2006

SINGAPORE -- Singapore's state-owned ports group, PSA International, is unlikely to break up P&O should it succeed in a battle to take over the British ports and ferries firm, a Singapore newspaper reported on Monday.

The Business Times cited unidentified people close to the deal who said it was "too simplistic" to think that PSA -- owned by the Singapore government's investment arm Temasek -- would buy P&O only to break it up.

PSA made a 3.5 billion pound ($6.2 billion) approach for London-based P&O last Tuesday, trumping an agreed 3.3 billion agreed offer from state-back Dubai Ports World. PSA has yet to decide whether to go ahead with a full bid.

Britain's Sunday Telegraph reported over the weekend that PSA had approached a number of rival port operators about selling them P&O assets and said the Singapore group had tentative agreements with Denmark's AP Moeller and International Container Terminal Services of the Philippines.

It is also thought to have held talks with APM Terminals, which is interested in P&O's Indian and Chinese assets.

PSA faces possible regulatory hurdles in a takeover of P&O, and analysts have predicted it may be forced to sell some assets in the Dutch port of Antwerp if it were to buy P&O.

Reuters

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Underdog won't leave fight for P&O quietly
By Alistair Osborne
January 17, 2006

DP WORLD is preparing to throw a spanner into the works if, as expected, the Port of Singapore Authority trumps its £3.3 billion ($7.8 billion) bid for Britain's P&O.

The Dubai ports group is expected to claim that, if the PSA is allowed to buy P&O, it will create a cosy duopoly in Europe's ports between the Singaporeans and Hong Kong's Hutchison Whampoa. P&O is also a major stevedore in Australia.

DP World lobbyists are expected to call for scrutiny of a deal last year between market leader Hutchison and the PSA, hailed as the start of a strategic alliance.

Last June Hutchison sold a 20 per cent stake in its Hong Kong terminals to the PSA for $US925 million ($1.2 billion).

Hutchison's managing director, Canning Fok, greeted the sale, saying: "We are happy that this transaction will create a strong alliance in the group's port operations and will put us in a position to have strategic co-operation resulting in further value creation for all parties."

As part of the deal, the PSA was invited to appoint two directors to the board of Hutchison's Hong Kong International Terminals.

DP World, which is advised by Deutsche Bank, is planning to ask regulators to examine the nature of such "strategic co-operation".

It is expected to argue that, should it extend to Europe, a combined PSA-P&O and Hutchison would own most of the UK's container ports. PSA would control Southampton, Tilbury and the planned London Gateway, while Hutchison owns Felixstowe and Thamesport.

PSA sources declined to comment but are expected to argue that any co-operation with Hutchison would be limited to Hong Kong.

Sydney Morning Herald

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DP World moves into unchartered waters
BY MARK T. TOWNSEND (Business Editor)
January 25, 2006

DUBAI — This week is likely to be pivotal for DP World (DPW) in its bid for P&O. It appears that archrival PSA International is poised to table a formal offer for P&O that could be in the region of 470p per share according to the Financial Times and significantly above DPW's current bid of 443p per share (£3.33 billion).

The P&O board has already signalled its intention to accommodate PSA by extending the shareholders meeting until 15 February. The question on everybody's lips now is how high is DPW prepared to go to acquire P&O? There is a straightforward axiom that says the higher the price the harder DPW will have to work to achieve a return on its investment.

It is conceivable that any counter bid from DPW may exceed 500p. The market seems to agree with P&O shares trading at 507p in London yesterday. Although having a hefty war chest from the funds raised from the recent Sukuk DPW is moving into unchartered waters with any increased bid posing a number of questions.

Despite previously indicating it would retain P&O ferries, the pressure to dispose of this unit will increase in order to recoup the hefty premium that DPW may be forced to table. It is also difficult to rationalise the strategic fit of P&O ferries with DPW's existing focus on its global ports business. Perhaps it should also consider the interest expressed by the acquisitive Toll Holdings which may wish to acquire P&O's Australian unit. This could fetch up to $1.1 billion according to Simon Mitchell of Merrill Lynch & Co. This would also seem a logical disposal and would enable DPW to focus on the core markets of China and India.

The other main issue will be DPW's ability to digest the P&O acquisition. With root differences in management culture it will necessitate a broader set of skills than those required for the acquisition of CSX Terminals. It will also call upon DPW's ability to restructure and integrate a listed company of the scale of P&O. In addition it should ready itself for the significant regulatory demands of the UK.

The stakes are high and will ultimately determine DPW's future position in the global ports business.

This week is also likely to be a nerve-jangling one for the DPW board.

Khaleej Times

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P&O veers towards PSA
January 26, 20

THE board of UK ports and ferry operator P&O has withdrawn its advice to shareholders to accept the offer from DP World of Dubai and has instead recommended acceptance of the offer by Singapore port operator PSA International. P&O and the board of directors of the PSA vehicle formed for the purpose of acquiring P&O, called PSA Venture (UK) Ltd, announced today that they had reached agreement on the terms of recommended cash offers to be made by UBS Investment Bank and Goldman Sachs International. PSA has offered £3.5Bn ($6.2Bn) or 470 pence per share, against rival DP World’s offer of £3.3Bn (443 pence per share). At completion of the offer, the operations of P&O would be merged with PSA, creating what the announcement described as one of the world’s largest port operators. “It is our intention to integrate quickly,” said PSA chairman Fock Siew Wah. P&O CEO Robert Woods has agreed to stay on and would be CEO of the UK businesses and chairman of the ferries division.

Fairplay

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Dubai ups bid for P&O
January 26, 2006

IN A late-night swoop, DP World has upped its offer for P&O to 520 pence, trumping PSA’s earlier bid of 470 pence. The new offer was announced at 1900 UK time on Thursday and surpasses the offer made by PSA of Singapore earlier in the day. The Dubai-based port operator was forced to act after the bidding war pushed shares up to 522 pence at Thursday's close on the London Stock Exchange. This is 70% higher than the closing price of 303.5 on 27 October, before a takeover was mooted. DP World's bid values the company at £3.88Bn ($6.90Bn). The P&O board, having previously changed its allegiance to PSA, has now swung its support behind DP World again. “The P&O directors have withdrawn their recommendation of the offer by PSA… and unanimously recommend that stockholders vote in favour of [DP World’s] proposals.” The vote is due to take place on 13 February, although it will be adjourned if a third party makes an offer of “more than 546 pence”, the statement added.

Fairplay

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'Uncharted territory' for P&O bid
January 27, 2006

SHARES in P&O rose to more thgan 540p today, in response to yesterday evening's 520p offer from DP World. Attitudes among London city brokers varied as to whether this would be a knockout bid or whether PSA International would make a counter bid. “We are now in uncharted territory,” said Mark McVicar at Dresdner Kleinwort Wasserstein. “It is now the highest price paid for any international port business and has gone beyond the normal 15x earning that might be expected. The normal parameters no longer apply for this unique asset.” He added: “They are both very interested because this is not the sort of company you can go out and buy and to build it up organically would take years.” Neil Davidson of Drewry Shipping Consultants called it a “one-off chance for PSA or DPW to buy such an asset.” If PSA wins it will become the biggest in the world; however, if DP World succeeds it will be on similar volumes to PSA. McVicar said: “we will just have to wait and see but I think this will run on.” If PSA does come back and wants a recommendation from the P&O board it will have to bid at least 546p.

Fairplay

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from Times Online.

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PSA's bid for P&O a sound business decision: PM Lee
By May Wong, Channel NewsAsia
January 29, 2006

SINGAPORE: Prime Minister Lee Hsien Loong says PSA's bid for British ports and ferries group P&O, is for sound business reasons and not prestige.

He admits the tussle for P&O with Dubai Ports World will not be easy, but Mr Lee says PSA has to seize the opportunities.

Greeting PSA staff, Mr Lee says they, along with its union and management have worked hard to restructure PSA, in order for it to compete internationally.

But Mr Lee says it is necessary for PSA to continue to develop and grow to meet future challenges.

And for this reason, PSA is hoping to seal the deal with P&O, initially with a $10 billion offer on Thursday.

But what if Singapore fails as competitor Dubai Ports World has already countered with a higher offer?

Prime Minister Lee Hsien Loong said, "That we'll have to see because these are business decisions and there's a right price and right commitment which you must make to each project and I'm quite sure PSA is studying carefully how to respond and what to do. As I said, we don't come with gas and oil in our pockets. We have to make hard-headed business decisions and we go for the opportunities. If you get them, that's good. If they don't come your way, well, you have other ways to make up."

But will Singapore's acquisitions cause some resentment overseas?

Mr Lee believes there might be some sensitivities in the region, but that is something Singapore has to take in its stride; "In the region, sometimes, you have a telecoms acquisition like Temasek just bought Shin Corp, then there's some flak in the Thai media and I suppose there's been some flak in some of the other countries as well over some of the Singapore companies there. These are things we have to manage. I think from the point of view of ASEAN, the more these cross-border linkages take place, the better it is. We welcome foreign companies to buy up here."

This is the first time Mr Lee is visiting PSA as Prime Minister on the first day of the Lunar New Year.

He says PSA is critical to the success of Singapore's economy. Mr Lee says PSA has emerged leaner and stronger today.

But he advises the port operator to pay close attention to 3 key areas.

The first requirement Mr Lee says is to equip its staff with skills to stay flexible.

Secondly, PSA should make sure it stays relevant, by encouraging its staff to upgrade,

Finally, to leverage on modern technology by equipping its staff with basic IT skills.

PM Lee said, "Singapore depends on PSA. Not just because of the jobs and profits within PSA itself, but to keep Singapore a thriving hub in South East Asia.
We're the exchange, the centre, not the branch line. If PSA had not measured up, the whole economy, would have suffered and our position in the world would have changed. You're like Raffles City Station, interchange. All the rides come through here. And we're sitting on top and therefore we prosper. So we better stay on top of Raffles City.

"You're a Singapore icon. You should also be a Singapore idol. All Singaporeans take pride in your success."

Mr Lee is confident PSA will continue to forge ahead with many more good years.

Channel NewsAsia

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Counter-blow by PSA likely in P&O battle
By Shakir Husain, Staff Reporter
February 1, 2006 

Dubai: Although Dubai Ports World has offered a "hard to beat" price to acquire P&O, it cannot be certain about closing the deal yet.

Dubai should soon expect a higher bid from rival Port of Singapore Authority (PSA), analysts told Gulf News yesterday.

John Lawson, of Investec Securities in London, said: "We are getting close to the end-game scenario, but [we believe] there will be one more round of bidding." Lawson expects PSA, which is owned by the Singapore government's investment arm Temasek, to raise its bid before the scheduled P&O shareholders meeting on February 13.

Who will pay more?

The meeting has been called to approve Dubai Ports' £3.88 billion (Dh24 billion) offer. Dubai outbid Singapore on January 26 by offering 520 pence for each P&O share compared to PSA's offer that valued each stock unit at 470 pence. Dubai has also persuaded the P&O board not to consider any new bid below 546 pence, but PSA will remain in the fray if it raises the price above 520 pence.

"Ultimately it is for the shareholders of P&O to decide," Lawson said.

In a bidding war, the final price may reach 550 pence per share, he added.

"Both companies want the (P&O) business and both are prepared to bid higher than normal investors," Lawson added.

Neil Davidson, director of research at Drewry Shipping Consultants, also believes that Dubai has not dealt the knock-out blow to PSA yet.

"We have to wait and see. It is certainly a strong bid and a hard price to beat," he said of the Dubai offer.

"The ball is in Singapore's court. We have to see who is prepared to pay more," Davidson added.

PSA, which holds about four per cent of P&O shares, will still make higher returns on its investment, even if fails to take over P&O.

Gulf News

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DPW likely to win P&O race
BY BABU DAS AUGUSTINE (Assistant Editor)
February 7, 2006

DUBAI — The chances of Dubai Ports World (DPW) winning the hotly contested takeover bid for British ports and ferry operator Peninsular & Oriental Steam Navigation Co appeared brighter yesterday as Singapore owned PSA was reported to be considering quitting the race.

Speaking to Khaleej Times’ Business Editor, Sultan Ahmed bin Sulayem, chairman of DP World said: “The DP World bid is the only real bid and we wait to see the result.”

Earlier during the day citing well-placed sources, Singapore's Business Times reported that PSA International is unlikely to up its bid for P&O. The newspaper said quoting sources close to the deal that PSA is still considering its options but is close to "throwing in the towel" in what many analysts consider to be an already over-priced contest.

State-owned groups PSA and Dubai Ports World are battling to take over P&O, which owns valuable container ports and other assets in UK, India, China, Australia. P&O shareholders are scheduled to meet on February 13 to vote on Dubai Ports World's bid of 520 pence per share, which was recommended by P&O's management. The bid values the firm at £3.9 billion ($7 billion).

PSA and Dubai Ports World have been pitted against each other in the battle for P&O since PSA made a counter-offer of 470 pence per share ($10.7 billion) to DPW's original offer of 443 pence a share. DPW later upped the offer to 520 pence per share, 10.6 per cent more than PSA's bid and 17 per cent higher than its original bid.

Analysts said that Dubai's aggressive bid has indeed been a sign that DP World is determined to go any length to acquire the British port operator. However Singapore on the other hand had hinted that the price far outstripped the value of assets and opportunities from the deal.

Singapore's Prime Minister Lee Hsien Loong had hinted that the city-state may not be willing to match Dubai's price. Industry players interpret recent comments on the takeover battle by Prime Minister Lee Hsien Loong as a sign that the Singapore firm may not go after P&O at any cost.

Lee said last week there was "a right price and right commitment" for each project. "We don't come with gas and oil in our pockets. We have to make hard-headed business decisions and we go for opportunities. If we get them, that's good. If they don't come your way, well, you have other ways to make up," Lee said.

Earlier this week P&O said it had agreed not to adjourn the planned shareholder meeting to vote on Dubai's bid unless it received an offer of more than 546p. However, Reuters quoting an unnamed source said, P&O directors might still accept a counter bid from PSA below 546p.

P&O was the FTSE 100's biggest faller yesterday, dipping 2.6 per cent to 536p as reports suggested PSA is unlikely to increase its bid of 470p a share, leaving DP World, which offered 520p a share, as the top bidder.

A successful bid by Dubai Ports World would create the world's third-largest ports group, while victory for PSA would create the world number one, ahead of Hong Kong's Hutchison Whampoa.

Khaleej Times

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