I started looking into this DP World takeover of Britain’s Peninsula and Oriental Steam Navigation Company (P&O). It appears that DP World’s only real competitor was a company from Singapore named Temasek Holdings. Most experts expected Temasek to win the bidding war. Temasek is run by a woman named Ho Ching. Ho Ching is known as ‘The Dragon Lady’.
As recently as January 16th, The Australian (Lexis) reported:
HEADLINE: Dragon Lady calls the shots in P&O battle
BODY: Powerful Temasek boss Ho Ching holds the fate of the British ports group in her hand, report Dominic O’Connell and Michael Sheridan
THE fate of P&O, Britain’s premier ports group that controls half of Australia’s waterfront, rests in the hands of Ho Ching, a 52-year-old woman at the centre of the tightly knit elite that runs Singapore.
Ho is chief executive of Temasek, the secretive investment arm of the Singapore Government and 100 per cent owner of PSA, the ports group that has been stalking P&O for a year.
PSA was finally roused to action by an audacious pound stg. 3.3 billion ($7.7 billion) agreed bid for P&O by Dubai Ports World, a rival shipping group owned by the Dubai Government. Last week P&O revealed that it had received a conditional pound stg. 3.5 billion counter-offer from the Singaporeans.
A decision on a formal bid is likely within a fortnight. P&O shares closed last week at 500p, well ahead of the expected PSA offer of 470p a share.
So, would the country be equally outraged to have a Singapore based company running our ports? And what do the Australians think about Dubai controlling half of their waterfront? So far, I can’t find any reaction from Australians at all.
The whole issue of port operation is complicated. Dubai is an upstart in the industry. As recently as July 30, 2005, the South China Morning Post (Lexis) reported:
HEADLINE: New kid on the docks still an outsider
BYLINE: DPI Terminals’ genteel diplomacy faces test in Machiavellian Hong Kong, writes Russell Barling
BODY:
The toughest thing about buying your way into an elite corporate neighbourhood is proving you belong there.Almost eight months after Dubai’s state-owned DPI Terminals [a DP World subsidiary] stole the spotlight last year with its audacious late raid for the global port assets of United States rail giant CSX Corp, Asia’s shipping aristocracy continues to look down its nose at the Middle Eastern upstart, dismissing it as just “new money”.
In Hong Kong, where Hutchison Whampoa and the Wharf (Group) have ruled the roost since exporters chose steel boxes as their preferred method of transporting goods, DPI’s appearance has changed the dynamic on the waterfront – quite possibly for the better.
Gone is the cosy port duopoly. And although DPI has been quick to assuage the incumbents with promises not to rock the boat on pricing, its new language promises a more vigorous business culture is on the cards for Hong Kong’s port.
“The end game is to be an effective competitor in Hong Kong, offering trade and industry a competitive service,” said Anil Wats, DPI managing director (Asia and Australia).
“We want to contribute in repositioning Hong Kong as an effective regional player, to compete with South China and certainly other ports in the region.”
DP World’s successful bid has obviously rocked ‘Asia’s shipping aristocracy’. Temasek is trying to reassure investors:
State-linked Singapore investment firm Temasek Holdings remains a formidable global player despite wholly-owned unit PSA International’s failure to secure Britain’s biggest port operator, analysts say.
The general public was unaware of the fact that only a few major international corporations have the cash and capability to run major ports. The British P&O ran the ports that DP World is due to takeover. Ninety-nine percent of P&O’s shareholders voted to accept DP World’s bid. That is the way the global corporate economy works.
Now that a United Arab Emirate run corporation owns P&O they also own the contract to operate our ports. And if we are going to tear up that contract we can expect to open up a whole can of worms, including retaliation and shockwaves through the whole shipping world.
It’s an important debate to have, but we should at least have some understanding of who the players are and how this issue can quickly call into question the whole system of international investment and commerce.
If we reject Dubai (DP World), do we give the contract to Singapore (Temasek). Do we take over our own ports? And what do we do in the interim?
There is a lot of political posturing going on, and it is fun to watch the White House get beat up by Republicans and Democrats alike. But this issue is not simply resolved.
