P&O, the ports and logistics group, has received a takeover approach which could be worth up to £3bn from Dubai Ports World.
It is thought that the move could set off a bidding war for P&O, the only publicly-listed global ports operator. Rivals covet its scarce waterfront assets in a business that has consistently grown faster than global GDP, as a result of the strong expansion of world trade.
Other possible bidders include the Singapore ports company Temasek, the Danish shipping giant AP Moeller-Maersk and Hong Kong's Hutchison Whampoa.
The iconic British group, which is the fourth-largest ports operator in the world, said in a statement: "P&O confirms that it has received a very preliminary contact from a third party, which may or may not lead to an offer for the company."
P&O declined to say anything further. Both DPW and its financial adviser, Deutsche Bank, refused to make any comment.
It is understood that no firm proposal has been put forward by DPW and the "contact" between it and P&O so far has not been substantial.
P&O has 27 container terminals and logistics operations in more than 100 ports, with a presence in 18 countries. Its main service is containerised cargo handling, based on long-term contracts to operate terminals in ports. The British government this year granted conditional approval to the company's plans to invest £1.5bn in developing a deep water container port and a logistics business in the "London Gateway" area at Thurrock, Essex.
DPW is owned by the Gulf state's government and therefore its ruling family. That means that it is unlikely to have problems funding the deal. Dubai is the world's tenth-largest port.
Earlier this year, DPW bought the US group CSX Corporation for $1.15bn (£640m) to become the world's sixth-largest port operator. CSX's international terminal business comprises of nine terminals with 24 berths. The acquisition provided DPW with access to new growing markets in Asia and Latin America, which are forecast to offer the highest volume growth in the port industry. This included important bases in Hong Kong, China and South Korea.
The ports sector is going through a consolidation phase globally. Even within the UK, PD Ports announced this month that it had received a takeover bid. Earlier this year, Mersey Docks was bought by Peel Holdings.
In July P&O appointed a new chairman, Sir John Parker, replacing Lord Sterling, who had led the company since 1983. It has also just bolstered its team of non-executive directors, including the addition of Mike Turner, the chief executive of BAE Systems, and Baroness Symons, a former government minister.
DPW, led by its executive chairman Sultan Ahmed Bin Sulayem, is likely to try to convince Sir John that the long-term investment required to develop ports is not suited to the public arena. P&O will probably point out that ports offer good organic growth opportunities.
It is unclear whether DPW would be interested in all P&O's other businesses - it also has a ferries business, which has suffered from difficult trading conditions in recent years, and a logistics arm that transports goods that need to be refrigerated.
Last week, P&O warned that slowing UK economic growth had hit profits at its ports in Tilbury and Southampton.Reuse content