Judge asked to block P&O takeover

A High Court judge in London was asked today to block the controversial takeover of shipping giant P&O by Dubai Ports World (DPW).

Objections to the takeover were raised by Miami-based Eller & Co, which has a joint venture agreement with a P&O subsidiary and claims that the deal will harms its interests.

Eller filed a last-minute petition on Friday night asking the court not to approve the £3.9bn (€5.7bn) deal with DPW, which is controlled by the ruling Maktoum family of the United Arab Emirates (UAE).

The proposed takeover has caused a political storm in Washington over concerns that it could threaten national security.

Both Republican and Democrat politicians have claimed that handing control of six US ports to the UAE would make the country more vulnerable to terrorism.

DPW has volunteered to postpone indefinitely its takeover of significant operations in Miami, New York, New Jersey, Baltimore, New Orleans and Philadelphia, and has also agreed to a 45-day review of the security implications of the deal.

In London, Mr Justice Warren had been expecting to hear a straightforward application to sanction a “scheme of arrangement”, allowing the deal to go ahead, until Eller stepped in.

Eller has already filed a similar lawsuit in the US. Its London petition cites several grounds of objection, including a “real prospect” that US authorities will revoke their approval of the takeover.

The company, which provides stevedoring services to 90% of cruise ships at the port of Miami, also argues that the deal breaches its joint venture contract and puts its business in jeopardy.

DPW won the support of the P&O board after a bidding war for the 165-year-old company. The scheme of arrangement involves the transfer of stock held by 174,000 P&O shareholders.

Martin Moore QC, for P&O, told Mr Justice Warren that the company’s US operations, over which concerns had been expressed, represented only 6% of its worldwide operating profits.

Evidence in support of the objections to the deal consisted of “press releases and extracts from press comment emanating from Washington and other parts of the US”, he said.

It amounted to “nothing”.

In any event, the situation had changed over the weekend with the announcement from DPW that it was prepared to re-submit itself to the US regulatory regime.

DPW’s case that the deal would result in a change of control under the terms of the joint venture was “woefully thin”, said Mr Moore.