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DP World looks to acquire Jebel Ali Free Zone and delist from London Stock Exchange

DP World looks to acquire Jebel Ali Free Zone and delist from London Stock Exchange

Dubai-based terminal operator DP World Limited (DP World) and its wholly owned subsidiary, DP World FZE, has entered into an agreement relating to the proposed acquisition of Economic Zones World FZE (EZW), its subsidiaries and subsidiary undertakings from Port and Free Zone World FZE (PFZW). The company said the deal is worth US$2.6bn.

EZW is a provider of industrial and logistics infrastructure, comprising five business units, the primary one being the Jebel Ali Free Zone FZE (JAFZ), representing 97% of revenue and operating profit in 2013. JAFZ is a 57 sq. km commercial and industrial logistics park adjacent to DPW’s flagship Jebel Ali port in Dubai.

The company says the acquisition will provide “significant strategic, operational and financial benefits”, including the “creation of the leading integrated port and free zone in the Middle East”.

DPW intends to fund the consideration for the proposed acquisition, its related costs and expenses, and the ongoing operations of the enlarged company from existing cash resources and existing committed conventional and murabaha term loan and revolving facilities.

The company is required to obtain prior approval from its shareholders, with an Extraordinary General Meeting to be held in December, when a shareholder resolution will be proposed, authorising the board to proceed. If the go-ahead is forthcoming, the deal is expected to be completed during Q2 2015.

At the same meeting, DP World will seek shareholder approval to delist from the London Stock Exchange. A key driver for obtaining the London listing in 2011 was to allow investors, who at the time were unable to invest through NASDAQ Dubai, access to the company through an alternative stock exchange.

Now, though, company directors believe that a significantly higher number of international investors are able to invest through NASDAQ Dubai and as of September 2014, approximately 99% of DPW shares were held by individuals and institutions investing through the NASDAQ Dubai.

In May the UAE was moved from frontier to emerging market status under the MSCI index classification system; it is understood that this will help companies listed on the NASDAQ Dubai and the countries other stock exchanges attract more interest from international investors.

Against this backdrop, DP World’s directors have taken the view that there is no material benefit in maintaining the London listing.

Conditional upon the Delisting Resolution receiving both general and independent shareholder approval at December’s meeting, the company will apply to cancel its London listing and to remove its securities from trading on the Main Market of the LSE. It is anticipated that the delisting will take effect on or around 21 January 2015.