DP World to sell U.S. port as­sets to AIG

The Washington Times Weekly - - National - By Sean Lengell

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.”

Astrid Riecken / The Wash­ing­ton Times

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.

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