Dubai: The possible acquisition of British port operator Peninsular and Oriental Steam Navigation Company (P&O) will help DP World to better handle tough competition for global port operations, according to ratings agency Fitch.
The agency expects some "rationalisation" of the combined portfolio in which core and non-core assets could be separated.
It said for both DP World and PSA International, the rival Singaporean suitor for P&O, the acquisition would reduce their dependence on the competitive trans-shipment market.
Post-merger, the entity will become the world's third largest container port company, and DP World will gain from P&O's geographically diversified assets in key regions like East Asia, Europe, Australia and India.
The global ports industry has witnessed fierce competition among top players for port assets and P&O's 29 container terminals and logistics operations in 19 countries are seen as the last large portfolio of assets available for sale.
With a big global network, DP World will be better protected from regional competition, the agency said. It will benefit from scale efficiencies, which could strengthen its pricing power at some ports.
Hong Kong's Hutchison Whampoa controls 13 per cent share of global container throughput, PSA and APM Terminals have nine per cent each and P&O has six per cent market share while DP World enjoys a three per cent.
