DP World to sell U.S. port assets to AIG
DP World announced on Dec. 11 that it will sell its terminal operations at seven major U.S. seaports to an American company, bowing to pressure from Congress.
The global marine terminal operator, based in Dubai, United Arab Emirates, said it reached an agreement on Dec. 10 to sell P&O Ports North America to a subsidiary of AIGGlobalInvestmentGroup,adivision of insurance giant American International Group. Terms were not disclosed.
P&O Ports North America operatescargoportterminalsinNewark, N.J., Philadelphia, Baltimore, Miami, New Orleans and Tampa, Fla. It also runs a passenger terminal in New York City and stevedoring facilities in 16 locations along the East and Gulf coasts.
Fivetoeightcompanies,allbased in the United States, were selected by DP World to submit bids for the U.S. properties, the company said. DP World said earlier this year that its American properties are worth about $700 million.
DP World acquired terminal operations at six of the ports in March when it purchased Peninsular and Oriental Steam Navigation Co., a British company that had owned P&OPortsNorthAmericaInc.since 1999. The Dubai company later added Tampa to its U.S. holdings.
The Bush administration approved of the $6.8 billion purchase, but the sale spurred outrage from members of Congress who worried that foreign ownership of U.S. port operations, particularly from an Arab state-owned company, would compromise security. DP World then agreed to find an American buyer for its U.S. operations.
Sen. Charles E. Schumer, New York Democrat, a vocal critic of the Dubai company running U.S. ports, said he was pleased with the proposal.
“Thisisanappropriatefinalchapter to the book on the Dubai Ports Worlddeal,”Mr.Schumersaid.“The winning bidder should be a good partner for America’s commerce and security. [. . . ] This transaction ishappeninginthebroadlightofday, whereitshouldhavebeenallalong.”
AIG Global Investment Group, which manages more than $635 billion in assets, said the daily operations at the ports wouldn’t change.
“ThisisnotlikeAIGbuyinganew business to run. This is AIG’s institutional investment arm making an investment,” AIG spokesman Chris Winans said.
“If you can buy an asset at an attractive price that promises an attractive return, that’s our goal — it’s nottogoinandbuysomethingthat’s broke and fix it.”
How long AIG keeps the ports is uncertain, but “assets like this you don’t just flip,” Mr. Winans said.
SharesofAIGrose65cents,or0.9 percent, to $71 on the New York Stock Exchange on Dec. 11.
“While we are disappointed to be exiting the U.S. market, the price we received was fair. We are pleased that [P&O Ports North America] will have a strong owner in AIG and wish them well for the future,” said Sultan Ahmed Bin Sulayem, DP World chairman.
DP World said it will continue to expand its operations globally. The company is one of the largest marine terminal operators in the world with a network of 51 terminals in 24 countries.
The transaction is subject to regulatory approvals, including from variousportauthorities,butdoesnot require a vote from Congress. The acquisition, if approved, is expected to close during the first quarter of next year.
Brooks Oyster, executive director of the Maryland Port Administration, which operates the Port of Baltimore, said he approves of the proposed deal.
“Thishasbeenalongprocess,and it is good for all parties that it is finallymovingforward,”hesaid.“We lookforwardtoreviewinglong-term investments in infrastructure with AIG in the near future.”
The Port of Baltimore is one of seven major U.S. seaports whose terminal operations will be transferred to AIG Global Investment Group, an American company, early next year if a deal reached with DPWorld, based in Dubai, United Arab Emirates, meets government regulatory approval.