- The Washington Times - Thursday, August 17, 2006

Dubai Ports World is moving ahead with a plan to spin off its recently acquired U.S. operations, with preliminary bids from suitors due tomorrow.

DP World officials promised to sell P&O; Ports North America Inc. to an American buyer by September after Congress protested the takeover of U.S. port terminal operations by the state-owned company from the Middle East.

The Dubai company acquired the operations in March when it purchased Peninsular and Oriental Steam Navigation Co., a British company that had owned P&O; Ports North America Inc. since 1999.

DP World in mid-July sent a description of port terminal operations in Baltimore, Philadelphia, Miami, New Orleans, New York and Newark, N.J., to potential bidders.

DP World is not commenting on the sale, and potential buyers had to sign confidentiality agreements before receiving a detailed description of the U.S. operations.

“Mergers and acquisitions are, by their nature, confidential,” said Ted Meyer, spokesman for Deutsche Bank Securities, which is advising DP World on the sale.

DP World pledged to sell the U.S. operations to an American buyer, although there is still room for foreign investors to participate in the sale. The company’s paperwork noted that the buyer must be palatable to the U.S. government.

Port terminal operations are dominated by non-U.S. companies, and there are few U.S. port terminal operators that could purchase and run P&O;’s assets.

SSA Marine, owned by Seattle company Carrix Inc., is one possible suitor. Maher Terminals of Port Elizabeth, N.J., also would be capable of running the port operations, though the company is small by international standards.

Analysts said U.S. investment banks also are likely to enter the bidding process.

“A few years ago, the main interested parties were other container terminals. Today, the financial sector, institutional investors, infrastructure funds are major players,” said Neil Davidson, research director for London firm Drewry Shipping Consultants Ltd.

Goldman Sachs, the U.S. investment bank, and Borealis Infrastructure Management, a Canadian investor, in July bought Associated British Ports, Britain’s largest port operator. The Goldman-led team beat out a rival group led by Australia’s Macquarie Bank Ltd.

The Carlyle Group, a private equity firm in the District, in March established a team to invest in ports, transportation and other infrastructure.

“Fundamentally, the driver is the fact that ports and terminal operations are a very solid and profitable businesses,” Mr. Davidson said.

DP World initially valued its U.S. assets at almost $700 million, although analysts said the company is unlikely to find a bidder willing to pay that much. One source with knowledge of the sale process said DP World has emphasized that revenues are growing rapidly because of strong international trade, but cautioned that the U.S. operations still did not make enough money to justify such a high price tag.

The Baltimore Sun reported that DP World’s U.S. holdings in 2005 posted an income of $39 million before taxes, interest, depreciation and amortization on revenue of $447 million.

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