Troubled waters

The coming days should reveal the outcome of the battle to win control of the British ports and ferries operator P&O. There are only two bidders: Dubai Ports World (DPW) and Singapore’s PSA. But will the winner really have much to celebrate? On paper at least, yes.

  • E-Mail
By  Tamara Walid Published  January 22, 2006

|~||~||~|The coming days should reveal the outcome of the battle to win control of the British ports and ferries operator P&O. There are only two bidders: Dubai Ports World (DPW) and Singapore’s PSA. But will the winner really have much to celebrate? On paper at least, yes. PSA has operations in 11 countries and is the world’s second-largest ports group. DPW was only formed last September with the amalgamation of the Dubai Ports Authority and DPI Terminals. The company’s container throughput is roughly a third of what PSA handles. But if DPW were to get its hands on P&O — currently the world’s fourth-largest ports group — the industry landscape would shift dramatically. In an instant, DPW would immediately become the second-largest player in the marketplace. Better still, it would also have secured key ports in India and Australia — markets in which fast traffic growth is anticipated. It all sounds very good. Almost too good to be true. Which is where the problem lies. DPW fired the first shot in this bidding war when it made an offer of US$5.91 billion in November 2005. Singapore’s PSA has hit back, approaching P&O with a conditional counter offer of US$6.21 billion. In order to help fund the massive bid and an expected higher offer, Dubai Ports, Customs & Free Zone Corporation (PCFC) has launched the world’s largest sukuk, or Sharia-compliant bond. To be precise, US$3.5 billion worth of it. Which indicates that DPW will make an offer in the region of US$7 billion. At that price, no matter how great the new market share, getting a return on profits may prove tough. That figure represents nearly 14 times the earnings of P&O. It would take a monumental financial effort to make that level of bid work financially. Both the Singapore and Dubai offers are genuine attempts to quickly attain a big place on the world ports stage. And winning the bid will more than do that. In the short term, it will propel either DPW or PSA into a position of global domination. But both bidders must ensure that victory does not come at any price.||**||Top Jobs|~||~||~|The iPod story just gets better and better. As we report this week in our cover story, computer giant Apple shifted some 14 million of the music gizmos in 2005. That equates to 100 every sixty seconds. Over the course of the iPod's short life, the company has also made a gross profit of US$6.2 billion on the product alone. Nothing short of staggering. The Middle East should also shortly increase in significance as a market for the company, when it launches an Arabic version. Most of the credit belongs to Apple boss Steve Jobs. His strategy has turned around Apple in recent years, from a company that was in danger of becoming irrelevant to one that is leading the rest of the industry. Dell founder Michael Dell, who once famously predicted the end of Apple, has been made to eat humble pie. And in the process, Jobs has notched himself a personal wealth approaching US$3 billion. Nobody could argue that he doesn’t deserve every penny of it. Apple is back in the big league, and this time, it is here to stay.||**||High hopes|~||~||~|All eyes are on Al Jazeera, which launches its English-language satellite news channel in April this year. With big name presenters such as Sir David Frost heading the line up, success is almost guaranteed. But almost isn’t the same as fully, especially when you consider wrongly-held views of Al Jazeera in the West. It also needs to watch out for the rise of a new English news channel from MBC. As we reveal elsewhere in this issue, the company behind Al Arabiya is planning a stock market flotation. Nobody is certain of the value of such a listing, but expect it to be close to the billion dollar mark. Enough to give Al Arabiya all the financial muscle it needs to launch a strong rival to Al Jazeera. Also watch out for another Arabic owned English news channel which will be based in the UK. Details of that will follow next week in Arabian Business.||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code