By Ben Flanagan and Reuters
Further diplomatic strain mounts as New York's Port Authority demands $84m and sensitive information.
Further diplomatic strain over DP World’s controversial acquisition of P&O emerged today with news that the forced sale of its U.S. port assets has hit a snag.
Today’s Wall Street Journal reports that the sale of the US port holdings to a unit of American International Group Inc. has been delayed due to squabbles with the Port Authority of New York and New Jersey.
The Port Authority has made a number of unexpected objections and conditions to DP World's proposed sale of its port-management contract to AIG Global Investment Group, the paper said, citing people familiar with the deal.
DP World has received approval for the sale at all of the other facilities it operates in the United States, but the Port Authority is demanding that the company pay as much as $84 million in order to approve the lease transfer, according to the report.
The Port Authority has also demanded access to sensitive business information, which both DP World and AIG Global have been reluctant to turn over, the paper said.
The new demands have cast the overall transaction into jeopardy by greatly increasing the transaction cost for DP World.
State-owned DP World acquired P&O this year for US$6.8 billion, but was forced to relinquish control of the British operator's US assets amid a political firestorm in which it was alleged that the deal posed a threat to American national security. The controversy was widely attributed to political posturing ahead of America’s midterm elections.
Neither The Port Authority nor AIG were immediately available to comment. A spokesman for DP World based in the US told ArabianBusiness.com that the company had not yet released a statement on the matter.
This whole thing has just been stupid. The acquisition and operations should have been approved. The NY Port Authority shouldn't get a dime for a transition and if they don't like the transition, let them manage their own port.
It's beyond stupid. There was never a legitimate security issue; it was all political posturing to embarrass Bush before the election, but few Americans were aware of this. DP World was gracious enough to offer to sell the ports to an American operator when they didn't have to. They should not suffer any financial loss as a result of their gesture.
So if the NY Port Authority want to try it on and make a few bucks - why not ? Isn't this type of bullying what happens in big business all the time ? Lends a whole new meaning to entrepreneurial spirit !