Dubai’s massive port operator DP World is delisting and returning to private ownership

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DP World, one of the world’s largest port operators, is delisting from the Nasdaq Dubai and returning to fully private ownership, the company announced Monday.

The UAE-owned port behemoth’s parent company, Port and Free Zone World, has offered to buy the 19.55% of DP World’s shares traded on the Nasdaq Dubai for $16.75 a share, representing a 29% premium on its closing price of $13 per share on Sunday, the statement said.

Following the announcement, the firm’s stock rose 10% to $14.30 in morning trade in the Middle East.

The company said the move would enable DP World to “focus on its medium-to-long-term strategy of transforming from a global port operator to an infrastructure-led end-to-end logistics provider.” Company executives described the company’s public trading as ultimately too beholden to short-term returns.

Upon completion of the deal, it will be 100% owned by Port and Free Zone World.

The development could be bad news for the Nasdaq Dubai, for whom DP World has been a major draw for investors trading the publicly-listed shares. The Dubai-based exchange did not offer comment when contacted by CNBC. DP World had a market value of about $10 billion as of Monday morning, whereas the whole exchange is worth over $130 billion.

“The DP World Board has concluded that the disadvantages of maintaining a public listing outweigh the benefits,” Yuvraj Narayan, group chief financial, strategy and business officer of DP World, said in the statement Monday.

“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 hold a short-term view. As a result of this gap, the DP World strategy is not fully appreciated by the equity markets, and consequently is not reflected in the company’s share price performance.”

DP World Group Chairman and CEO Sultan Ahmed bin Sulayem described the ports and logistics industry as in the midst of a major transition, with its customer base undergoing consolidation and the “vertical integration of several competitors.”

“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,” he said.

DP World operates 48 marine terminals and 13 port developments in more than 30 countries.

Shares of DP World peaked in late January 2018 at $26.99 per share and have fallen about 52% since then as of Sunday’s market close in the United Arab Emirates. The company’s revenue in 2018 was $5.6 billion, a nearly 20% increase on the previous year, according to its latest available financial report.

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