DUBAI PORT WORLD (DP WORLD), the maritime commerce arm of the government of the Gulf emirate, has agreed to pay 3.32bn [pounds sterling] ($5.7bn) in cash to take control of the British-based company P&O, whose celebrated history dates back to 1837.
For well over a century, Britain's venerable P&O shipping line was the largest in the world--best known for providing a vital service for the British empire in the movement of civil servants and the military, as well as mail and government documents, between London and Delhi and British colonies of the Far East.
During the last quarter of the 20th century, P&O diversified into construction management, property investment and development, along with a variety of service businesses including exhibition and conference centres. However, a decision made nearly six years ago by P&O's then chairman Lord Sterling, CEO Robert Woods and the board of directors saw the company move away from being an unfocused conglomerate to concentrate on the company's core maritime and transport interests.
P&O was a world-leader in cold logistics services until that division was sold to the Canadian company Versacold Holdings Corp. for $315m just four weeks before the DP World buyout.
The DP World purchase of P&O represents the latest expansion of the interests of Crown Prince Sheikh Mohammed and Dubai's Maktoum royal family.
Shortly after P&O accepted the takeover offer from Dubai, Temasek Holdings Ltd, controlled by Singapore's Ministry of Finance, acquired a minority 3.4% stake of 8.1m P&O shares. However, most industry observers believe it unlikely that a full counterbid will emerge.
The meteoric growth of Dubai's economy can be traced back to the 1960s when modest reserves of oil were discovered in the kingdom. Sheikh Mohammed's father, Sheikh Rashid, invested a significant part of the oil windfall in a programme to create a free-trade zone and develop Dubai's port facilities.
Dubai Ports (which comprised Dubai Ports Authority (DPA) and DP World) has been at the forefront of Dubai's extraordinary transformation into one of the world's leading trade and commerce hubs.
Few could have foreseen that within half a century, Dubai would be transformed from a sleepy trading post, serving shipping plying between the Far East and Europe (including many P&O ships), into one of the world's top three port consortiums.
DPA operations focus on home ports at Rashid and Jebel Ali which DPI, the forerunner of DP World, formed in 1999...