DP World is planning to return to private ownership by delisting from the Nasdaq Dubai exchange. The company says it is taking this step as it believes it is the best way to help deliver its aspiration of becoming world’s leading end-to-end logistics provider.
DP World’s parent company Port and Free Zone World, has offered to acquire the 19.55 % of DP World’s shares traded on Nasdaq Dubai. On acceptance of the offer, DP World will be 100% owned by Port and Free Zone World, which in turn is a wholly-owned subsidiary of Dubai World. Each DP World share will be acquired at $16.75, representing a 29% premium on the market price at the time the offer was made.
DP World stresses that it remains financially strong, with a healthy balance sheet and a consistent track record of delivering profitability. In recent years, the company has made a series of acquisitions as part of its strategy to become the world’s leading end-to-end logistics provider, including Unifeeder, P&O Ferries, Continental Warehousing, and Topaz Energy & Marine.
Yuvraj Narayan, Group Chief Financial, Strategy and Business Officer of DP World, said, “The DP World Board has concluded that the disadvantages of maintaining a public listing outweigh the benefits. 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.”
While sharing DP World’s view as to the potential benefits of delisting, leading shipping consultancy Drewry has sounded a note of caution. The company suggests that “The decision to delist will further deteriorate its already higher leverage. Moving forward, a lot will depends on the company’s ability to generate significant synergies from the recently concluded bolt-on acquisitions.”