Dubai-based DP World Agrees to Sell U.S. Terminal Operations Businesses
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DP World, the parent of P&O Holdings, Inc., announced earlier this week that they had reached an agreement to sell their U.S. assets and marine terminal operations business to AIG Global Investment Group. The price of the transaction was not disclosed. Industry analysts have said that the deal is worth at least $700 million. DP world’s press release said that the deal, subject to various regulatory approvals, is expected to close in the first quarter of 2007.
News of the deal was well received in Washington, where lawmakers expect the resale of DP world’s terminal operations at American seaports to AIG to receive broad support. The deal, if it closes, will put an end to the political controversy surrounding DP World’s acquisition of the leases and operating contracts for some US ports when it purchased Peninsular and Oriental Holdings, for $6.8 billion. That deal erupted into an immediate political firestorm when US lawmakers claimed that DP world’s involvement with US port operations would threaten national security. Eventually, DP World agreed to seek a buyer for their US-based operations.
DP World also said that while they were disappointed to be leaving the US markets, that they had also received a fair price for their businesses and assets. The Dubai-based firm is one of the world’s largest marine terminal operators, boasting 51 terminals across 24 countries. They did not rule out other, future business deals in America.
Although the Bush administration did agree to allow DP World to acquire the U.S. port operations in January of last year, news of the deal, described by some lawmakers as secretive and poorly vetted, soon scuttled any hope of domestic backing. The political fallout went far beyond DP World’s ability to operate a few US-based terminals. Later, the White House withdrew the nomination of DP World executive David Sanborn as Maritime Administrator. Sanborn himself sent a letter to President Bush asking that his name be withdrawn.
Sanborn's nomination was perhaps the most visible casualty in the DP World marine terminal operations flap. His nomination came at a bad time in view of the storm of controversy boiling in Washington about the fitness of Dubai-owned DP World to provide operations for US ports. Although he received a friendly reception in Washington in his February confirmation hearings, his nomination was ultimately doomed when the DP-World deal storm erupted and continued to escalate.