DP WORLD TO ACQUIRE TWO DUBAI MARITIME ENTITIES
▶ Ports operator expects to complete deals for DMC and Drydocks in 2018
DP World, the world’s fourth largest ports operator, plans to take over two state-owned maritime entities in Dubai for US$405 million. It is the company’s second acquisition of assets in the UAE in three years after buying the Jebel Ali free zone owner in a US$2.6 billion acquisition.
The Nasdaq-listed company said it will purchase Maritime World, the owner of Dubai Maritime City (DMC), for $180m and Drydocks World, a unit of state-owned Dubai World, through a $225m capital injection.
The acquisitions are expected to be concluded by the end of the first quarter of next year. The Drydocks deal is subject to the completion of the company’s debt restructuring.
Drydocks World is seeking to write off 80 per cent of a $1.4bn loan, its second debt restructuring, Bloomberg reported last year.
The acquisitions are expected to be “earnings accretive” from the first full year of consolidation, the port operator said.
DP World will benefit from the acquisition of DMC, a maritime service facility and industrial business zone, thanks to its location adjacent to the company’s Port Rashid.
Its 2.3 million square metres of space will provide Economic Zones World (EZW), the port operator’s free-zone subsidiary that owns the highly-occupied Jebel Ali Free zone, with additional space. The purchase of Drydocks World, the Middle East’s largest ship repair yard, provides “stable ship and rig repair revenues” and will be integrated into P&O Maritime, DP World’s maritime services subsidiary, it added.
“Dubai Maritime City provides us with stable leasing income from DMC’s existing industrial zone and spare capacity to develop industrial and commercial activities for the maritime sector in a prime location of Dubai,” said Sultan bin Sulayem, the chairman of DP World. “Drydocks World bolsters our investment in the maritime sector through our subsidiary P&O Maritime.”
In 2014, DP World agreed to purchase EZW, the owner of Jebel Ali free zone, from the Dubai World conglomerate. The $2.6bn EZW deal helped to reduce the debt burden for Dubai World, which struck a deal with creditors to restructure $15bn worth of debt.
DP World reported a marginal decrease in its first-half 2017 net income but said improvements in the global trading environment have kepy it on track to meet full-year market expectations.
The profit attributable to the shareholders reached $606m for the six months to June 30, which compares with a profit of $608m for the corresponding period of 2016. The income for the period was in line with Egyptian lender EFG-Hermes’ estimates.
DP World’s revenue for the first six months of 2017 climbed 9.6 per cent to $2.29bn. Cash from operating activities for the period also rose to $1bn, up from $905m recorded in the first half of 2016.