When they gang together, Washington politicians can make almost anyone look sensible. They have outdone themselves in the P&O saga. Who would have thought that of all the parties involved in the sale of the UK shipping group, Dubai Ports World might emerge with some credit?
As the last global port operator to come on the block, P&O was always likely to command scarcity value. Having two state-controlled suitors, as well as a strong presence in fast-growing Asia, helped. At about 70 per cent above P&O’s undisturbed share price, however, DP World clearly had to pay up to defeat PSA, the Singapore port operator.
To make the deal work financially, DP World will have to move swiftly to reap the benefits from its wider geographic reach. Operating efficiencies aside, having a global presence would be a neat bargaining chip in dealing with shipping line customers, also in consolidation mood. This helps explain DP World’s eagerness to compromise in the face of the belated outcry in Washington.
US port operations are small for now, accounting for only about 8 per cent of operating profits at P&O’s port unit. But, in theory at least, US ports should also offer enticing growth prospects. Granting well-run foreign operators a larger role is likely to boost efficiency. Security is by no means the only area in which US ports are a bit of a global backwater. Convincing lawmakers now looks tough, however, no matter how sensibly DP World makes its case.