DP World exit will open Australian port contest

News that the Dubai government is considering flogging some of its top assets, including a stake in the Emirates airline, raises the prospect that DP World will renew confidential plans to spin out its Australian ports business, The Australian.

We understand Deutsche Bank and JPMorgan are tuning up to run a dual track sale process of the local business in the first half of next year, although the official line of course is that there is no intention to sell.

The accounts of DP World (Australia) Holdings reveal that the local outfit intriguingly sold its international assets and its P&O maritime business "to companies in the wider DP World Group'' in December 2008.

That asset reshuffle may well indicate a corporate preparation to sell the local ports operations as part of a float or trade sale. A gain on disposal of US$1.64 billion was recognised in the 2008 accounts and in June last year a deed of revocation was lodged with ASIC to remove cross-guarantees between DP World (Australia) and the two assets it divested to its parent.

So who would buy it and what's it worth? DP World Australia made a net profit before tax in the year to December 31 last year of $112.49 million. The closest local comparison is Asciano, whose Patrick ports unit competes with DP World and Hutchison Ports in the major hubs. Based on Asciano's enterprise value to EBIT multiple of about 13 times, DP Australia would be worth $1.44 billion.

The big risk is that DP Australia will lose share to Asciano in an upcoming contract renewal by Scandinavian container giant Maersk. Potential buyers include private equity and the Chris Corrigan and Sam Kaplan-backed Qube Logistics.
(Source:www.cargonewsasia.com)