|17 February, 2020

Dubai's DP World to delist, return to full state ownership

DP World will be fully owned by parent Port and Free Zone World, a subsidiary of state investment vehicle Dubai World, once it delists

Image used for illustrative purpose. Terminal tractors line up to offload their containers into a cargo ship at DP World's fully automated Terminal 2 at Jebel Ali Port in Dubai, United Arab Emirates, December 27, 2018.

Image used for illustrative purpose. Terminal tractors line up to offload their containers into a cargo ship at DP World's fully automated Terminal 2 at Jebel Ali Port in Dubai, United Arab Emirates, December 27, 2018.

REUTERS/ Hamad I Mohammed

DUBAI - Dubai's DP World, one of the world's largest port operator's, said on Monday it would delist and return to full state ownership in a deal valuing the company at $13.9 billion.

DP World operates ports around the world, from Hong Kong to Buenos Aires, and is headquartered at its flagship Jebel Ali Port in Dubai, the Middle East's biggest transhipment hub.

Port and Free Zone World, a wholly-owned subsidiary of state investment vehicle Dubai World, is to acquire the 19.55% of shares listed on the Nasdaq Dubai, according to a stock filing.

Port and Free Zone World already owns 80.45% of ordinary share capital of DP World.

Each listed share will be acquired for $16.75, a 28.8% premium on Sunday's closing price of $13 a share.

Port and Free Zone World will finance the transaction in new facilities arranged by Citibank and Deutsche Bank, the filing said.

Port and Free Zone World will also provide $5.15 billion in funds to Dubai World, helping it meet outstanding obligations to lenders so that DP World can implement its strategy without restrictions, it said.

Dubai World subsidiaries face certain restrictions due to agreements it has with creditors. DP World had been exempt from those restrictions as long as it was listed.

Proceeds will also be used to allow DP World to fund the potential redemption of its convertible bonds, the filing said.

DP World is delisting to focus on its medium-to-long-term strategy of becoming "the world’s leading logistics provider," said Chairman Sultan Ahmed bin Sulayem.

The port operator, which listed on the Nasdaq Dubai in 2007, has diversified its operations in recent years to include industrial parks, transportation, and other logistic services assets.

"The demands of the public market for short term returns ... are incompatible with this industry," said bin Sulayem.

Port and Free Zone World intends to maintain DP World's governance structure, the filing said.

DP World shares surged 9.62% after it announced it would delist, but they had lost more than a quarter of value over the past year.

The port operator blamed the U.S.-China trade war and regional geopolitics for causing uncertainty last year, with gross container volumes through its ports contracting 0.2%.

The operator was valued at $4.96 billion when it listed in 2007. It was also listed on the London Stock Exchange between 2011 and 2015.

(Reporting by Alexander Cornwell; Editing by Kim Coghill and Tom Hogue) ((Alexander.Cornwell@thomsonreuters.com;))

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