U.K. shipping company P&O OKs $5.7B deal

The Peninsular and Oriental Steam Navigation Company (P&O), a British company that operates ferries and ports, said Tuesday it is recommending a 3.3 billion pound ($5.7 billion) takeover bid by a Dubai-based company in a deal that would create the world's third-largest port operator.

DP World, a wholly owned subsidiary of Ports, Customs and Free Zone Corp. of Dubai, offered 443 pence ($7.60) cash for each unit of deferred P&O stock, representing a premium of 46 percent over the closing price on Oct. 27, the day before speculation about a takeover began.

P&O shares closed at 435 pence on Monday.

P&O operates 29 container terminals, which generate 80 percent of the company's profits; it has logistics operations in more than 100 ports, and operates 26 ferries linking Britain with France, Belgium, the Netherlands, Ireland and Spain.

The acquisition would make DP World the world's third largest port operator in terms of capacity.

"DP World's offer recognizes that P&O is a unique brand with an exceptional footprint of international port assets," P&O Chairman John Parker said in a statement.

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"The unparalleled strategic fit of the two companies' complementary global ports portfolios and the strong development pipeline, including London Gateway, is particularly compelling," said Sultan Ahmed Bin Sulayem, chairman of DP World.

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He said P&O's headquarters would remain in London.

Analysts said 443 pence a share was fair, given that the buyer will assume responsibility for P&O's pension fund deficit.

The Wall Street Journal Europe reported Tuesday that global port operators in Hong Kong, Singapore, Denmark and elsewhere may consider rival bids for P&O.