São Paulo – DP World, the ports operator based in Dubai, United Arab Emirates, has made a proposal to acquire Economic Zones World FZE (EZW) and its subsidiaries for US$ 2.6 billion. EZW’s main business is the Jebel Ali Free Zone (Jafza), located in the emirate. The deal has been announced this Thursday (13th) in a communiqué issued by the company.
In its proposal, DP World also offers to assume US$ 859 million in net debt. EZW is a provider of industrial and logistics infrastructure comprising five units: Jafza, Jafza Enterprises, EZW Corporate, Business Center World and Emerging Business Units. DP World is already the operator of the Jebel Ali Port, which adjoins the free zone.
The concerns involved in the deal are sister companies, since their majority stakeholder is the state-owned holding company Dubai World, which filed a moratorium request after taking a serious hit from the international financial crisis in 2008. The profitable DP World, however, was left out of the restructuring and became virtually detached from the holding company.
The acquisition of Jafza, a crucial business for DP World’s Jebel Ali operations, is also a way of having the healthy company buy assets and inject capital into the parent company, while keeping business under local government control.
As EZW’s main business, Jafza accounts for 97% of revenues and operating profit. According to the communiqué, DP World expects EZW earnings to increase by over 15% and return on capital employed to exceed 7% in the first full financial year following the deal.
“The acquisition of EZW represents a strategic and commercial opportunity that will benefit our customers as well as our company. Jebel Ali Port and Free Zone support and drive the growth of Dubai and the wider region of some two billion people,” said DP World chairman Ahmed Bin Sulayem according to the communiqué.
“Together, we will be able to offer seamless supply chain services to shippers and shipping lines, linking sea, road and air across the port and the free zone to the new Al Maktoum Airport, via the Dubai Logistics Corridor, to help them further improve efficiency,” said Sulayem.
According to the communiqué, in order for the deal to go through, DP World needs shareholder approval first. To this end, the company has scheduled an extraordinary meeting for December 18th.
DP World is also planning on delisting its stock from the London Stock Exchange and transferring all its shares to Nasdaq Dubai. Shareholders will also decide on this matter on December 18th.
*Translated by Gabriel Pomerancblum
