DP World's deal may cool backlash

Dubai: DP World's agreement to postpone direct management of P&O's US operations should allow the acquisition to keep to schedule while defusing an emotional reaction in the United States say analysts.

While DP World will not delay the deal itself, a release to the world's press stated the UAE-based company would delay taking over the management of the six North American ports presently owned by P&O to give the Bush administration time to tackle US fears.

"We appreciate that there are many people in the US who have expressed concerns about DP World taking over the operations of P&O in the US, even though we have given formal commitments to the government of the United States that the management and structure presently in place at those ports will stay the same."

For Neil Davidson, Head of Research at Drewry Shipping Company, "it's a clever move... DP World is trying to find some sort of balance, to allay fears and act in a fair and diplomatic way, while moving the deal forward. This helps it do exactly that."

Yesterday's announcement succeeds in defusing a charged situation, says Davidson, without really changing its practical plans for acquiring the company.

Concession

While Sultan Ahmad Bin Sulayem, Chairman of DP World, would not be drawn to add additonal details to the release, he did tell Gulf News "the main thing is the deal [to acquire the company] is moving ahead on schedule."

P&O in the US is fairly distinct and autonomous and used to running itself. Segregating the company means it will continue to run itself, although be owned by DP World.

"That would always have been part of the plan," says Davidson. "It is going to take DP World time to be able to digest and absorb P&O's global operations."

DP World's statement made clear that its concession to segregate US assets was no way is a reflection on its rights, or the way it has handled the acquisition so far.

"We went through the legal approval process mandated by Congress that we were required to go through. Additionally, we passed every security standard in a review conducted by twelve separate departments and agencies of the US government. Finally, we obtained all of the clearances required of other countries involved. In light of this situation, DP World."

Ted Bilkey, Chief Operating Officer for DP World noted "the reaction in the United States has occurred in no other country in the world. We need to understand the concerns of the people in the US who are worried about this transaction and make sure that they are addressed to the benefit of all parties.

Stated plan of action towards takeover

DP World intends that the acquisition of P&O will proceed as planned. P&O's shareholders voted overwhelmingly for the transaction. DP World intends that the closing and payment to P&O shareholders will take place on schedule.

DP World will segregate P&O's US operations while it engages in further consultations with the Bush Administration and as appropriate Congressional leadership and relevant port authorities to address concerns over future security arrangements at P&O's US ports, which are today in full compliance with all US security requirements. In practice, this will mean that DP World will not exercise control over, or otherwise influence the management of, P&O's US operations pending the outcome of these further discussions.