By Bernd Debusmann Jr
DP World's plans to delist will help repay more than $5 billion of government-related debt
Dubai's DP World will de-list from Nasdaq Dubai and return to private ownership, in a move the company says will allow it to focus on its mid-and-long term strategy of changing from a ports operator to an end-to-end logistics provider and freeing it from the short-term return demands of the public market.
On Monday, it was announced that DP World parent company Port and Free Zone World has offered to acquire the 19.55 percent of its shares listed on Nasdaq Dubai.
“The DP World Board has concluded that the disadvantages of maintaining a public listing outweigh the benefits,” said Yuvraj Narayan, the group chief financial, strategy and business officer of DP World. “Delisting from Nasdaq Dubai is in the best interest of the company, enabling it to execute its medium to long-term strategy.”
In a statement, DP World said that Port and Free Zone World’s board of director and the independent directors of DP World agreed to a cash offer to the shares, which will be acquired at $16.75, a 29 percent premium on the market closing price of $13 on Sunday.
“DP World is focused on the transformation of the group and takes a long-term view of investment returns and value creation,” Narayan added.
“In contrast, public markets typically hold a short-term view. As a result of this gap, the DP World strategy is not fully appreciated by the equity markets, and consequently is not reflected in the company’s share price performance.”
Sultan Ahmed bin Sulayem, DP World’s group chairman and CEO, said that the global ports and logistic industry has been undergoing a significant transition as a result of the consolidation of its customer bae and the vertical integration of a number of DP World’s competitors.
“DP World must be able to continue responding effectively to this rapidly changing landscape and to invest in the future,” he said. “Returning to private ownership will free DP World from the demands of the public market for short term returns with are incompatible with this industry, and enable the company to focus on implementing out long-to-mid-term strategy to build the world’s leading logistics provider.
DP World's plans to delist will help repay more than $5 billion of government-related debt, Bloomberg reports.
As part of DP World Ltd.’s delisting, its parent - Port and Free Zone World - will pay Dubai World $5.15 billion to help it repay outstanding commitments to banks. The conglomerate has about $9.9 billion in debt maturing in 2022 and a further $1.1 billion due in 2026, according to data compiled by Bloomberg.
The plans come as Dubai faces the prospect of restructuring a chunk of $23 billion in loans to government-related companies maturing at the end of 2021 for a second time, according to Fitch Ratings Ltd.
The emirate has enlisted the help of two of its most trusted officials to steer key companies through a drawn-out slowdown, after they pulled the business hub back from the brink of default more than a decade ago.
As part of the deal: