The Dubai-backed ports group bidding £3.3bn to acquire P&O saw support for its offer dwindle yesterday after two of its target's biggest shareholders trimmed their stakes.
Dubai Ports World launched its 443p-per-share offer for P&O along with letters of intent to back the bid representing 18.6 per cent of P&O's equity from its top three investors. But that support slipped yesterday to 15.9 per cent after Schroders and Insight Investment Management scaled back their holding.
It is the second setback to DPW's chances of acquiring P&O and follows the surprise emergence of Singapore's state-owned Temasek Holding on the UK group's share register.
Temasek is keeping all its options open regarding its intentions towards P&O after amassing a 4 per cent stake just days after DPW launched its offer.
Shares in P&O remain well above DPW's offer price, falling 2p yesterday to 478p, implying the market is anticipating a further move from Temasek. At the very least, Temasek wants to force the Dubai-backing companies to the negotiating table to discuss breaking up P&O.
Sources close to DPW played down the threat to their bid from yesterday's share sales, which saw Schroder reduce its holding by 10.6 million shares to 53.4 million and Insight trim its stake by 6.6 million shares to 17 million. One advisor dismissed the sales as a "technicality" following P&O's elevation to the FTSE 100 this week. This makes it impossible for some of the institutions' FTSE 250 tracker funds to hold the stock, hence the share sales.
DPW has structured its agreed bid for P&O as a scheme of arrangement so it needs 75 per cent of shareholders to back the deal to succeed. Earlier this week the Takeover Panel forced Temasek to clarify it had not ruled out a potential counterbid.
The Singaporean group, which controls the world's second biggest ports operator, the Port of Singapore Authority, said it wished "to make clear that no statement has been made which imposes an obligation upon, nor restricts, either of them from any future course of action". Temasek includes Singapore Airlines, Singapore Telecommunications, the Raffles hotel group and Neptune Orient lines.
A merger of DPW and P&O would create world's third largest group, putting pressure on PSA International and Hong Kong's Hutchison Whampoa, the market leader.Reuse content