Dubai Port Deal Fails the Smell Test

Homeland Security Initially Opposed Ports Deal

WASHINGTON (AP) -- The Homeland Security Department objected at first to a United Arab Emirates company's taking over significant operations at six U.S. ports. It was the lone protest among members of the government committee that eventually approved the deal without dissent.

Billionaire Sheikh Of Dubai Wins P&O

[If the purchase price of the British port company "doesn't make sense" from a commercial standpoint, why is this sheikh smiling after ponying up all that money?]

Forbes, February 9, 2006

The winner in the tussle for P&O is now steaming ahead to victory. The venerated British shipping company Peninsular & Oriental Steam Navigation is set to be folded into the holdings of the Dubai government, after rival bidder PSA International bowed out of the race.



Overseen by the billionaire Sheikh Mohammed bin Rashid Al Maktoum, the state of Dubai will now own the world's third-largest ports operator. PSA International, the Singapore-based hauling giant, seemed a hair's breadth away from owning P&O and finally gaining some ground on its archrival Hutchinson Whampoa. Last month it had effectively scuttled the original $5.8 billion bid by Dubai's shipping company DP World with its $6.1 billion offer, and warmed the cockles of shareholders' hearts with the prospect of a bidding war.

As the P&O board switched allegiances to the Singaporeans, it seemed unclear if the sheiks would dip into their coffers once more for a counterbid. Sure enough, however, DP World came back with a knockout offer of $6.8 billion. At that, PSA has crept away, saying that to continue in the race would not be in its best interest. "PSA has decided not to increase its offer and will therefore no longer pursue the acquisition of P&O," it said in a statement, adding that going beyond Dubai's offer would not make "commercial business sense."

For the complete story of the strangely overpriced sale, scroll down to the bottom of this Forbes article.