UK court clears Dubai port deal

Britain's High Court has approved the takeover of UK shipping icon Peninsular and Oriental Steam Navigation Co by state-owned Dubai Ports World, despite a last-minute objection by a US company.

    Dubai Ports World is in a takeover bid for P&O

    But Dubai Ports World (DP World) said on Thursday that it would hold off finalising the deal until next week, following massive political pressure in the US over the prospect of an Arab state-owned company taking control of terminal operations in six major US ports. 


    P&O's worldwide interests include terminal operations in Baltimore, Miami, New Jersey, New Orleans, New York and


    Not done yet


    Senior DP World officials told the US House Armed Services Committee the deal would now likely be concluded on Monday or Tuesday of next week. 


    Edward Bilkey, chief operating officer of the company, told the committee: "At that time we have to mail out $6.8 billion to the various shareholders."

    Robert Kimmit, the deputy US treasury secretary, said the delay was because of the court cases and also to the widespread controversy. 

    Democratic and Republican lawmakers have applied massive pressure on the White House in a bid to scuttle the deal. 


    On Thursday, Justice Nicholas Warren dismissed the appeal from Miami-based Eller & Co as he gave the required go-ahead.


    Warren said: "The objections of Eller do not persuade me that I should not sanction the scheme."


    Eller had argued that US concerns about a United Arab Emirates company owning significant operations at six major US seaports could substantially harm its business.


    Eller Company, based in Miami, Florida, has a joint venture agreement with a subsidiary of P&0.


    Eller had argued that a successful takeover by DP World, which is controlled by the ruling Maktoum family in the United Arab Emirates, would harm its national interests.


    Security concern


    Late last week, DPW said, it would postpone its takeover bid and subsequently agreed to a 45-day review of the deal in the United States, where security remains a real concern following the 11 September attacks in 2001.


    Eller has filed a similar lawsuit against the takeover in the United States, which would see new ownership for ports at Baltimore, Miami, New Jersey, New Orleans, New York and Philadelphia.


    P&O's US operations account for
    only 6% of its worldwide profit

    lawmakers conceded on Wednesday that they are powerless to prevent the sale from going forward, and have placed their hope in an 11th-hour intervention by George Bush, the US president.


    Administration officials have said, contrary to public fears, the US Coast Guard and Customs Service would still be in charge of security when DP World takes over management of the terminals.


    Approval revoked


    Lawmakers - particularly opposition US Democrats - have kept up their assault, saying the plan reflected the administration's general languid approach to homeland security.


    In its London petition, Eller said there was a "real prospect" that US authorities, who had initially backed the transaction, would revoke their approval.


    Eller, which provides stevedoring services to 90% of cruise ships in the port of Miami, also argued that the deal would violate its joint venture agreement with P&O and jeopardise its business.


    Paul Downes, an attorney representing Eller, said the company feared the takeover would result in the loss of $150 million and could affect the job-status of 1500 workers at the port.


    But Martin Moore, representing P&0, has contended that the company's US operations, over which concerns have been expressed, accounted for only 6% of its worldwide operating profits.

    SOURCE: Agencies


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