The Hindu Business Line : PSA International eyes Peninsular

PSA International, Singapore, has made an approach to acquire Peninsular & Oriental Steam Navigation Co, a British container port and ferries operator. This rivals an offer by the Dubai-based DP World.

The Singapore port operator did not give a value for its proposal but has offered the whole of the P&O deferred stock at 470 pence in cash per unit compared to 443 pence offered by DP World, according to information available on P&O's Web site.

If PSA succeeds in acquiring P&O, it would have a near monopoly of container handling in India. In addition to its operations in Tuticorin, Tamil Nadu, PSA will have in its control India's three major container terminals: Nhava Sheva, Mumbai; Chennai Container Terminal, Chennai; and Mundra International Container Terminal, Gujarat; apart from a share in the Vishaka Container Terminal at Visakhapatnam.

Further, PSA is one of the leading bidders for the second private container terminal planned in Chennai.

Against the total Indian container trade volumes of about 4.3 million TEUs (twenty foot equivalent units) in 2004, P&O Ports handled about 2 million TEUs.

"This shows P&O's strong presence, which would be transferred to the successfully bidder," said a source.

"PSA will be much bigger than Dubai Ports in India," said a source. "Irrespective of PSA or Dubai Ports acquiring P&O, it would be interesting how the Centre reacts to a monopoly like situation," the source said.

PSA's proposal does not amount to a firm intention to make an offer and is subject to some pre-conditions, including the completion of satisfactory due diligence, final PSA board approval and a green signal from P&O's pension fund trustees, the British company said.

PSA, wholly owned by State-linked Singapore investment firm Temasek Holdings, has investments in 19 port projects across 11 countries including Belgium, Brunei, China, India, Italy, Japan, the Netherlands, Portugal, South Korea and Thailand. In 2005, it handled 37.25 million TEUs (30.23 million TEUs) .

Since the announcement of DP World's recommended acquisition in December, PSA has increased the size of its holding in P&O deferred stock to 4.1 per cent having purchased stock at a price of up to 460 pence per unit.

P&O said it has deferred for two weeks a stockholders' meeting scheduled for January 20 to allow PSA "a limited period of time to satisfy its pre-conditions and put forward a formal offer," information on P&O's Web site says.