British appeals court allows Dubai company’s takeover of port operator P&O to proceed
LONDON – The controversial takeover of British shipping company P&O by Dubai’s state-owned DP World received the green light Monday when Britain’s Court of Appeal dismissed a Miami firm’s objection to the deal.The Court of Appeal declined to hear an appeal from Miami-based Eller & Co., which had tried to have the deal barred on technical grounds, arguing that U.S. concerns about a United Arab Emirates company owning significant operations at six major U.S. seaports could harm its business.The lower High Court had already approved the 3.9 billion pound ($6.8 billion) acquisition of the Peninsular and Oriental Steam Navigation Co. and Monday’s unanimous decision by the three judges of the Court of Appeal means that the deal is now free to proceed through the final regulatory stages.In a statement following the decision, P&O said the takeover will now become effective on March 8 and that the shipping company’s shares will be delisted from the London, Sydney and Tokyo stock exchanges on March 9.The deal was originally due to be closed last Thursday, but Eller’s last-minute petition resulted in an extended three-day hearing in the High Court – which must give approval for the takeover to go ahead.Justice Nicholas Warren gave that approval on Thursday, but placed a hold on his ruling to allow Eller to take the case to the higher court.Justices Anthony Lloyd, David Neuberger and Martin Moore-Bick lifted the hold order Monday as they ruled that Eller had no case on four technical grounds, including an argument that hundreds of shareholders in Australia were not given adequate notice of a vote on the deal because of a mailing problem.Eller said after the ruling that it was disappointed by the decision, but it did not intend to appeal the judgment. However, it said it would continue to pursue legal action in the U.S. courts in Florida.”We are not alone in opposing this deal – many elected politicians in the U.S. and indeed the American public, share many of our concerns about the takeover,” the company said in a statement.”We will continue to fight to protect our business and the livelihood of thousands of our staff and subcontractors,” it added.P&O runs shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia – a fact that has caused unease among some lawmakers and businesses in the United States who have cited security concerns about an Arab company taking over the ports.DP World has attempted to defuse some of the tension by saying the U.S. ports will remain separate to the overall deal and submitting itself to a second 45-day investigation by the U.S. government, despite already receiving regulatory approval.Chief Executive Mohammed Sharaf said Sunday he expected the deal to be completed.”All the authorities are comfortable with the security measures that we take,” he said. “As far as we are concerned, the deal is going to go through, and the British government has approved it.””There are big consequences for the British market if it doesn’t go through because investors are waiting for the money,” he said on CNN’s “Late Edition.”Lawyers for DP World warned last week that a delay beyond Friday meant that the company will not be able to access the money it needs to pay shareholders on time. Lawyers for P&O said they will pursue Eller for the costs of the British legislation.President Bush has supported the takeover deal and lawmakers that were initially opposed seem to have softened slightly, tempering calls for an immediate vote to block the takeover. Many said the new probe reassured them and negated the need for legislation for now.A U.S. federal judge has also ruled against a request by New Jersey to order an investigation into the takeover.The High Court’s Warren said in his ruling last week that U.S. concerns about port security and threats of port authorities withdrawing business were partly fueled by Eller and he did not find them credible.