Dubai on course to snap up P&O for £3.2bn

Click to follow

The ports and ferries group P&O is set to fall to a foreign takeover bid from oil-rich Dubai valuing the company at about £3.2bn. An announcement of the agreed offer from Dubai Ports World, which ranks sixth in the global ports league, is expected early next week.

DPW's offer is expected to be pitched at around the current P&O share price, which closed up 2 per cent at 438p yesterday. That would still represent a premium of more than 40 per cent to P&O's market capitalisation before the Emirates-based DPW was flushed out late last month as the bidder.

The takeover will bring nearly 170 years of British maritime history to a close and mark the final disappearance of the shipping empire built up by Lord Sterling, the former chairman of the modern-day P&O. He demerged P&O's container shipping division four years ago and sold off much of its property interests, leaving it focused on port operations and cross-Channel ferries.

DPW's interest in P&O had been expected to stimulate an auction, with other Far East groups entering the fray including Temasek of Singapore and the Hong Kong-based Hutchison Ports, which owns Felixstowe and Harwich on the east coast. AP Moller-Maersk, the Danish shipping giant which recently bought P&O Nedlloyd, has also been seen as a potential bidder.

But only DPW is thought to have tabled a serious offer. Senior P&O management was thought to be locked in talks yesterday to hammer out a deal. An announcement is possible on Tuesday.

P&O operates 29 container terminals, including Southampton and Tilbury on the Thames and ports on the east coast of the US. It has been given the go-ahead to construct a £1.5bn deep-sea container terminal at Shellhaven, named the London Gateway.

A takeover of P&O would mean yet another well-known UK name disappearing under foreign ownership after Deutsche Post's purchase of Exel, Saint-Gobain's acquisition of BPB and Telefónica's agreed bid for O2. It would also mark yet another deal in the UK ports sector. Mersey Docks and Harbour was bought this year by the North-west property magnate John Whittaker, while PD Ports, the owner of Teesport in the North-east, has received an approach from the Australian bank Westpac.

P&O's ports business and its valuable portfolio of waterside land is seen as the main attraction for DPW. But the takeover will inevitably place a question mark over its ferries business, which has been slimmed down dramatically to stem heavy losses.