The Dubai terminal operator is officially out. The U.S. insurance giant is in.
DP World was forced by security-minded U.S. lawmakers last year to sell its stake in U.S. port terminals, including one in Baltimore, and the company said yesterday that it closed on the deal.
AIG Global Investment Group, the U.S. insurer's asset manager, bought the U.S. portfolio - called P&O; Ports North America - for an undisclosed sum. It will be renamed Ports America.
The sale had been held up temporarily by the Port Authority of New York and New Jersey. It wanted an agreement that the new company would make investments in local infrastructure.
Besides terminal operating contracts in New York-New Jersey and Baltimore, the portfolio includes terminal management in Philadelphia, New Orleans, Miami and Tampa, Fla. It also has cargo-handling duties in 16 other locations along the East and Gulf Coasts and management of a passenger terminal in New York.
An adviser for DP World said the company is a long-term owner and had planned to make investments in security and infrastructure in all of the ports. Now it will make those investments in other countries, many of which do business with U.S. ports. DP World operates 42 terminals in 22 countries.
The company said in December that AIG was the highest bidder for the U.S. assets. Some analysts had put the price tag beyond the $700 million that the company had suggested it was worth. The company paid $6.8 billion for the global portfolio it bought a year ago from London-based Peninsular & Oriental Steam Navigation Co., or P&O;, and said the U.S. assets represent about 10 percent.
Though many other terminal operators and other companies doing business in and around the port are foreign-owned, the Dubai company faced election-year opposition first by Democrats and later by Republicans who said its Arab government owners were a threat to port security.
Ports have long been considered vulnerable to bombs or other weapons of mass destruction because of the large amount of cargo that enters each day.
After a brief lobbying effort, the company agreed to a sale. P&O; Ports North America has been run as a separate company by London-based officials for the past year.
The port purchase is a first for AIG. Its officials have said AIG is a passive investor and would retain existing management and workers. There are about 65 managers in Baltimore and local dockworkers get thousands of hours of work from them.
"As a leading investor in infrastructure businesses we are pleased to add the acquisition of Ports America to our managed portfolios," Win Neuger, chief executive officer of the AIG Global Investment Group, said in a statement.