PSA makes formal approach for P&O;, offer higher than DP World’s

SINGAPORE: Singapore’s public sector company PSA International Pte. has confirmed that it is bidding for British container ports and ferries operator, the Peninsular & Oriental Steam Navigation Co. It will improve an offer by Dubai’s state-owned port operator Dubai Ports World.

While PSA International, owned by Singapore’s state investment firm Temasek Holdings Pte., did not disclose the value of the offer, sources said it could be worth 3.53 billion pounds, comparable with 3.3 billion pounds offered by DP World. The company already hiked its holding in P&O; to 4.1 per cent recently.

P&O;, the world’s fourth largest container terminal operator, said in a statement on its website that it had received an approach from PSA International “…which may lead to an offer to acquire the whole of the P&O; deferred stock at 470 pence in cash per unit”.

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However, the statement clarified that the proposal does not amount to a firm intention to make an offer and is subject to some pre-conditions, including a satisfactory due diligence and withdrawal by P&O; of its recommendation for DP World’s bid. P&O; is deferring a stockholders’ meeting scheduled for 20 January by two weeks in order to allow PSA International to have time to satisfy its pre-conditions, and put forward a formal offer, the company said

If PSA International indeed acquires P&O;, the unified entity will be the No 1 world over, past the Hong Kong-based Hutchison Ports. It has investments in 18 port projects across 11 countries including Belgium, Brunei, China, India, Italy, Japan, Netherlands, Portugal, South Korea and Thailand. It handles more than half of its total container volume in Singapore, the world’s busiest container port, but has been asked to reduce its dependence on the country alone.

Competitor Dubai Ports World is intending to expand in Asia, particularly India. It holds a 1.8 per cent stake in P&O.; It operates the Rashidad Jebel Ali ports in the Middle East and ports in Romania, Germany and India. Acquisition of P&O; will make it the world’s second largest port operator.

P&O;, founded in 1837, essentially for mail transportation, had exited the shipping business, sold property and lowered costs at its ferry business in 2005. It now focuses on terminal operations. It had a profit of 220.1 million pounds in the six months ended June 30 on revenue of 1.4 billion pounds.