U.S. firm is vague on deal for ports

Seattle company hires Citigroup as adviser

March 21, 2006|By MEREDITH COHN | MEREDITH COHN,SUN REPORTER

The American company most often named as a potential buyer of the U.S. operations of Dubai Ports World said for the first time yesterday that it is looking into a purchase - or a sale.

The vague announcement by SSA Marine, a private Seattle terminal operator and cargo handler, added to the guessing game. But it shed little light on who would end up at the nearly two dozen ports, including Baltimore, that Dubai Ports World entered when it bought Peninsular and Oriental Steam Navigation Co. this month.

Dubai Ports World agreed to sell the U.S. operations in the next four to six months to an American firm in an attempt to quell the furor raised by the prospect of an Arab government-owned firm running operations at U.S. ports. Lawmakers, including Republicans, had attacked the Bush administration for approving the deal and threatened to take action to block it.

Dubai Ports World agreed to run its U.S. port operations as a separate company and retain P&O management until the sale.

Other U.S. companies have been named as possible buyers, but SSA is the largest American terminal operator and stevedoring firm. It's the ninth-largest such company worldwide.

SSA said it had gotten so many inquiries recently from companies looking to "partner with, or invest in SSA Marine, as well as the opportunities to acquire additional operations" that it has hired Citigroup as financial adviser to "explore its strategic alternatives."

Clearly mindful of the political climate, SSA did take care to say specifically who it would not sell itself to.

"None of the alternatives we are exploring would involve selling control of our U.S. operations to a company owned by a foreign government," said company spokesman Bob Watters in a statement that ended its silence on such a move.

He declined to comment further.

Analysts have said they weren't sure if SSA Marine or any U.S. firm had the financial wherewithal or interest in buying U.S. operations from Dubai Ports World.

Dubai Ports World bought British-owned P&O for $6.8 billion, with the U.S. portion valued at about $700 million. Neil Davidson, research director for Drewry Shipping Consultants Ltd. in London, said the potential sale of SSA "opens up another can of worms."

If it's not SSA Marine, or a smaller U.S. firm, Maher Terminals Inc. of Berkeley Heights, N.J., the buyer could be a private equity firm.

Such an outfit, however, would only be interested if it could get a bargain sale price and a hefty return, he said.

A fire sale is unlikely.

Dubai Ports World said a sale of the U.S. operations was contingent on its suffering no "economic loss."

One option may be for U.S. taxpayers to make up the difference between what Dubai Ports World would be willing to accept and what a private equity firm would pay, Davidson said.

But there will be interest from other companies that are neither private equity firms nor cargo handlers, said Peter S. Shaerf, managing director of AMA Capital Partners LLC, a merchant banking firm in New York and Baltimore that focuses on the maritime and transportation industries.

The field was narrowed considerably when all foreign firms were put off the table by Dubai Ports World, not just those owned by foreign governments.

The world's biggest terminal operators - and the bulk operating in U.S. ports now - are foreign owned.

Shaerf said new entrants to the business might want both SSA and Dubai Ports World, Shaerf said.

"SSA could give someone a springboard into DP World," he said. "Companies look for synergies and economies of scale and all that. ... This is bringing out all the lookers."

meredith.cohn@baltsun.com

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