DP World plc (formerly Dubai Ports World), the world's fourth-largest port operator said it will delist from the NASDAQ Dubai stock exchange and return to full state-ownership because this move "is in the best interest of the company." It said 19.55% of its shares are listed on NASDAQ Dubai.
The parent firm of DP World is Port and Free Zone World based in the United Arab Emirates (UAE). In turn, Port and Free Zone World is a wholly-owned subsidiary of Dubai World, a government investment firm. DP World operates 48 marine terminals and 13 port developments in more than 30 countries.
The company said it's forsaking the advantages of being a publicly-traded firm as this option makes it ultimately too beholden to short term returns. Upon completion of the delisting, the company will be 100% owned by Port and Free Zone World.
"The DP World Board has concluded that the disadvantages of maintaining a public listing outweigh the benefits," said DP World CFO Yuvraj Narayan.
He said delisting from NASDAQ Dubai is in the best interest of the company, enabling it to execute its medium to long-term strategy. In contrast, public markets typically focus on a short-term view. This gap means DP World's strategy isn't fully appreciated by the equity markets and consequently is not reflected in its share price performance.
DP World Group Chairman and CEO Sultan Ahmed bin Sulayem said the global ports and logistics industry is in the midst of a major transition. He said the industry's customer base is undergoing consolidation and is contracting while the vertical integration of several port operators mean intensified competition.
"Returning to private ownership will free DP World from the demands of the public market for short term returns which are incompatible with this industry, and enable the company to focus on implementing our mid-to-long-term strategy" said bin Sulayem.
Port and Free Zone World has offered to buy the 19.55% of DP World's shares traded on NASDAQ Dubai for $16.75 a share, representing a 29% premium on its closing price of $13 per share on Sunday. The move sent the company's stock price soaring 10% in trading on Monday.
As part of the delisting, DP World will borrow an additional $8.1 billion in addition to its current debt. Returning DP World to full state ownership will also help Dubai World repays more than $5.15 billion in outstanding obligations to a number of banks. This way, DP World can implement its business strategy without any restrictions from Dubai World's creditors.
In August, DP World reported strong financials for the first half of 2019, including boosts to revenue and profits. The company's full-year profits in 2018 reached $1.29 billion.
