DP World sells US ports to AIG
Dubai's DP World will make a substantial profit on the forced sale of its US assets after agreeing to sell the business to American International Group, the world's biggest insurer, for more than $1bn.Both sides officially refused to reveal the sale price for the assets, the core of which is five container ports on the US east and Gulf coasts.But several parties involved in the second round of bidding said they were sure the price had comfortably exceeded $1bn – far more than the $700m DP World had been hoping to realise."It would be impossible for it to be under $1bn," a person close to one bidder said. "It has to be over $1bn by $100m or $200m."The US insurance and financial services group is thought to have beaten seven other bidders, including Carlyle Group, the US private equity group; a consortium led by Morgan Stanley, the investment bank; and CMA CGM, a French container shipping line.As well as the five container terminals, the business includes several cargo and passenger-handling operations.
The price reflects the soaring valuations of container port assets. Prices have been driven up by enthusiasm for infrastructure investment as well as the readiness of industry players to buy assets when available.The deal ends an extraordinary saga running since February, when US politicians realised that DP World's £3.92bn ($7.7bn, €5.8bn) takeover of P&O, the UK ports and ferries operator, meant an Arab state-owned company would run key container terminals in the US.Dubai's royal family agreed to the sale of the business – known as POPNA – in March after President George W. Bush told them he could no longer head off congressional opposition to the deal.DP World is thought to have targeted at least $700m as the selling price because it represented about 10 per cent of the £3.92bn it paid for P&O, and the US assets provided about 10 per cent of turnover.
Sultan Ahmed bin Sulayem, DP World's chairman, would say only that the price was fair.The business was sold to AIG's Global Investment Group, which owns no other port assets.The deal is expected to be completed in the first quarter of next year.Mohammed Sharaf, DP World's chief executive, said AIG's bid was the most compelling "price-wise and condition-wise".