Newspaper article The Evening Standard (London, England)

P&O on Crest of Wave as Bid Race Hopes Grow; MARKET REPORT

Newspaper article The Evening Standard (London, England)

P&O on Crest of Wave as Bid Race Hopes Grow; MARKET REPORT

Article excerpt

Byline: MICKEY CLARK

THE prospect of more bidders materialising for Peninsular & Oriental Steam Navigation intensified yesterday as shares in the company better known as P&O nudged up to a record 415p.

On Monday, shares in the world's fourth-largest ports operator surged on the news it had been approached by Dubai Ports World which last year paid $1.15 billion ([pounds sterling]649 million) for the container terminal assets of American railway operator CSX.

No terms have been agreed but DPW is expected to pay a generous premium to last Friday's closing price of 310p. Other bidders may be waiting in the wings, hoping to take advantage of some of the group's highly-lucrative ports which cover the fast-growing shipping lanes of India and China.

These include Temasek, which owns the Port of Singapore, Denmark's AP Moller-Maersk and Hong Kong's Hutchison Whampoa.

JPMorgan Cazenove has raised its fair value price on P&O to 475p.

Rival broker ABN Amro had, until Monday, taken the view the shares were fully valued, but has now lifted its rating from reduce to hold and is convinced DPW is willing to pay a "strategic" price to expand its container empire.

ABN has a base value on P&O of 400p which could rapidly rise to 500p in the case of an auction developing. The broker insists DPW is likely to remain free of regulatory interference, unlike a number of its rivals. Hutchison, for instance, already owns 90% of Felixstowe, Thamesport and Harwich and could run into competition issues.

Meanwhile, City speculators were casting their nets far and wide in an attempt to spot the next takeover target.

Some of them think it could be the oil sector, which has already enjoyed a strong run bolstered by the soaring price of crude. BG, the oil and gas exploration arm of the former British Gas, advanced as talk of a possible bid from rival Royal Dutch Shell was revived. At these levels, BG boasts a stock market value of [pounds sterling]18.2 billion - not beyond the deep pockets of a company like Shell which is braced to return around $22 billion to shareholders next year via special dividends and share buybacks. …

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