P&O's link with parent hinders DP World move

Dubai: The marketing of British group P&O's assets at six US ports, which its new owner DP World plans to sell, has not yet begun since their separation from the parent company has not been completed, a source close to the deal said.

Dubai Ports World acquired the management of container terminal operations at the ports of New York, New Jersey, Philadelphia, Miami, Baltimore and New Orleans under its $6.8 billion acquisition of Peninsular & Oriental Steam Navigation Company (P&O) in February.

But the assets and operating arrangements at the six ports, which DP World decided to sell after a public outcry over potential security risks, is intertwined with the rest of the company and separating them has been a slow and complex process, the source said.

"The bankers are not in a position to market those assets yet since they can't offer any guidance on cash flows at the moment. The really have had no discussions with potential buyers," the source told Gulf News.

But several entities have expressed interest in the assets, ranging from global and US private equity firms, US port operators, non-US port operators and even individuals.

The source said the bankers were not intimately familiar with the container operations at the individual US ports since they did not expect them to be sold.

They are now having to wade through the several contracts that the individual terminal operations have with partners, government agencies, transporters. Some of these are close to expiring and these are having to be renegotiated.

"Any future owner of those assets would like clarity on these contracts and the longer these contracts run, the higher the price DP World will get for these assets," the source said.

Besides, P&O's US operations carried the administrative overheads of its South American and Canadian businesses, separating which would take time.

The source said it was not possible to say how long it would take to complete and there had been no updates after DP World's initial guidance of four to six months.

The source said DP World's IPO, planned over the next 18 months, will not be affected even if the sale of the US assets is not completed, since the US business contributes less than five per cent of P&O's revenues.

Earlier this year, SSA Marine, Maher Terminals Inc of Berkeley Heights, New Jersey, and Marine Terminals Corp of Oakland, California, were seen as potential buyers of the DP World assets, according to ship brokers.

Of the top 10 container terminal operators in the US, seven are owned by international operators.

This number will decline to six if a US buyer for P&O's terminals is eventually found.