DP World Ltd.’s parent company Port and Free Zone World has offered to acquire the 19.55 percent of the port operator’s shares traded on Nasdaq Dubai, returning the company to private ownership.
DP World stated the disadvantages of staying listed on the stock exchange outweigh the benefits.
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The move will enable DP World to focus on its medium-to-long-term strategy of transforming from a global port operator to an infrastructure-led end-to-end logistics provider, it said.
“Delisting from Nasdaq Dubai is in the best interest of the company, enabling it to execute its medium to long-term strategy,” said Yuvraj Narayan, Group Chief Financial, Strategy and Business Officer of DP World.
“DP World is focused on the transformation of the group and takes a long-term view of investment returns and value creation. 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.”
PFZW offered to acquire 19.55 percent of DP World’s shares traded on the Nasdaq Dubai, returning the company to private ownership.
Each DP World share will be acquired at $16.75 (Dh61.51), representing a 29 percent premium on the market closing price of $13 on Sunday, DP World said. Shares of DP World rose 10 percent after the de-listing announcement to $14.30 at the end of trading on Monday.
“Returning to private ownership will free DP World from the demands of the public market for short-term returns which are incompatible with this industry, and enable the company to focus on implementing our mid-to-long-term strategy to build the world’s leading logistics provider,” said Sultan bin Sulayem, chairman and chief executive of DP World.
“The disruption occurring in our industry throws up a number of challenges and opportunities for DP World in both the shorter and longer-term,” said Deepak Parekh, Senior Independent Non-Executive Director of DP World. Delisting would give the company “greater flexibility going forward.”
The company will focus on integrating its acquisitions with its global network of interconnected ports, logistics businesses and economic zones, he said.
“PFZW is highly supportive of the DP World Board’s strategy and believes it is critical that DP World does not lose momentum in positioning itself as a leading global supply chain solutions provider,” DP World said on Monday.
PFZW will pay Dubai World $5.15 billion to help in discharging outstanding obligations to banks so that DP World can “implement its strategy without any restrictions from Dubai World’s creditors, the company said.
Proceeds of the agreement will also be used to settle other outstanding payments and transaction-related expenses to allow DP World to fund potential redemption of its convertible bonds.
PFZW will fund the deal through a new debt facility, arranged by Citibank and Deutsche Bank.
DP World reported flat growth in its shipping container volumes in 2019 amid market uncertainty from trade wars and geopolitical tensions.
The ports operator handled 71.2 million twenty-foot equivalent units (TEUs) across its global portfolio of container terminals last year, with gross container volumes flat year-on-year on a reported basis and up 1 percent on a like-for-like basis.
By Odindo Ayieko