TIDMDPW
RNS Number : 9007W
DP World Limited
13 November 2014
PROPOSED ACQUISITION OF JEBEL ALI FREE ZONE
PROPOSED DELISTING FROM THE LONDON STOCK EXCHANGE
Dubai, UAE 13 November 2014: DP World Limited (DP World) and its
wholly owned subsidiary, DP World FZE, today announce that they
have entered into an agreement in relation to the proposed
acquisition of Economic Zones World FZE (EZW), its subsidiaries and
subsidiary undertakings from Port and Free Zone World FZE (PFZW)
for a total cash consideration of US$2,600 million (subject to
certain adjustments) including the assumption of net debt at close
(US$859 million as at 30 June 2014), representing a multiple of
approximately 10.0x EZW EBITDA for the year ended 31 December
2013.
EZW is a provider of industrial and logistics infrastructure,
which comprises five business units: Jebel Ali Free Zone FZE
(JAFZ), JAFZA Enterprises FZE, EZW Corporate, Business Center World
FZE, and Emerging Business Units. JAFZ, EZW's primary business unit
representing 97 per cent of revenue and operating profit for the
year ended 31 December 2013, is a 57 square kilometre modern
commercial and industrial logistics park adjacent to DP World's
flagship Jebel Ali port in Dubai. The free zone is an integral
component of the supply chain for DP World's customers at the Jebel
Ali port.
The proposed acquisition provides significant strategic,
operational and financial benefits to DP World, including:
-- the creation of the leading integrated port and free zone in the Middle East region
-- a unique opportunity to control and optimise investment
levels at JAFZ - a strategically located asset integral to Jebel
Ali port's continued success as the leading gateway port in the
Middle East region
-- enhancing DP World's competitive advantage by delivering a
best-in-class customer experience by further strengthening Jebel
Ali port's integrated product offering, consistent with DP World's
strategy of providing port-centric integrated logistics solutions
at key gateway locations
-- stable recurring revenues, healthy margins and strong cash generation delivered by EZW
-- significant growth opportunities from EZW from increasing
occupancy, increasing lease rates and developing new investment
properties, underpinned by the continued growth of Dubai as a
trading and logistics hub
-- attractive financial returns for DP World shareholders with
the proposed acquisition expected to be more than 15 per cent
earnings enhancing, to generate greater than a 7 per cent return on
capital employed in the first full financial year following
completion and to increase the enlarged DP World adjusted EBITDA
margin to close to 50 per cent on a pro forma basis; and
-- retaining flexibility for growth with the enlarged DP World
having pro forma leverage(1) of 3.3x net debt to adjusted EBITDA.
DP World is expected to remain highly cash generative with no
impact to its existing dividend policy, whilst also expecting to
generate significant surplus cash for investment into growth and
debt repayment.
Sultan Ahmed Bin Sulayem, Chairman of DP World, commented on the
proposed acquisition:
"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. 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.
"Overall, this transaction is compelling from both a strategic
and financial perspective. This will allow us to enhance our
position as the leading logistics hub in the Middle East region,
accelerate growth and deliver shareholder value"
DP World intends to fund the consideration for the proposed
acquisition, its related costs and expenses, and the ongoing
operations of the enlarged DP World from existing cash resources
and existing committed conventional and murabaha term loan and
revolving facilities.
The existing US$650,000,000 trust certificates issued by JAFZ
Sukuk (2019) Limited due in 2019 and JAFZ's Syndicated Islamic
Facility, will remain in place following completion, with DP World
retaining flexibility to explore financing options.
For the year ended 31 December 2013, EZW generated revenue of
US$430 million, EBITDA of US$348 million and pro-forma(2) profit
before tax of US$221 million. As at 30 June 2014, EZW had gross
assets of US$3.7 billion on a pro forma basis. The EZW Group's
EBITDA margins have exceeded 80 per cent for the year ended 31
December 2013 and for the six months ended 30 June 2014. EZW
financial information has been converted from AED to US$ at an
exchange rate of AED3.6725 = US$1.00 being the average prevailing
rate for the year ended 31 December 2013.
Owing to the common ownership by PFZW of both the entire
ordinary share capital of EZW and 80.45 per cent of the ordinary
share capital of DP World, the proposed acquisition constitutes a
related party transaction. As a result of the size of the
transaction, it is also a Class 1 transaction for the purposes of
the UK Listing Rules, and therefore requires the approval of DP
World's independent shareholders.
Accordingly, DP World is required to obtain prior approval from
its shareholders pursuant to the UK Listing Rules. An Extraordinary
General Meeting will be held on 18 December 2014, when a
shareholder resolution will be proposed, authorising the Board to
proceed with the acquisition (Acquisition Resolution).
Conditional upon the Acquisition Resolution receiving
independent shareholder approval at the Extraordinary General
Meeting, it is anticipated that the transaction will be completed
during Q2 2015.
PROPOSED DELISTING FROM LONDON STOCK EXCHANGE
In addition, DP World is separately seeking approval from its
shareholders to delist DP World's shares from the London Stock
Exchange (LSE) (the Delisting). DP World will maintain its NASDAQ
Dubai listing.
A key driver for obtaining the London listing in 2011 was to
allow investors, who at that time were unable to invest in DP World
through NASDAQ Dubai, access to DP World through an alternative
stock exchange.
However, having monitored the situation closely, the directors
of DP World (Directors) believe that a significantly higher number
of international investors are now able to invest in shares listed
on NASDAQ Dubai and as at 30 September 2014, approximately 99 per
cent of DP World's shares were held by individuals and institutions
investing through the NASDAQ Dubai listing, with less than 1 per
cent being held in depository interest form through the LSE. In
addition, during the period from 2 September 2014 to 1 October
2014, the percentage of trading in the shares which occurred on the
LSE represented approximately 1 per cent of total trading volumes.
Furthermore, in May 2014 the UAE was moved from frontier to
emerging market status under the MSCI index classification system,
it is understood that this will help companies listed on NASDAQ
Dubai and the country's other stock exchanges attract even more
interest from international investors.
Against this backdrop, the Directors believe that the Dubai
listing is a sound base for DP World's international shareholder
base. As such, the Directors, and separately the independent
directors of DP World, are of the view that there is no material
benefit in maintaining the London listing. The shares will continue
to be traded on NASDAQ Dubai and, given the low volume of trading
in DP World's shares on the LSE, the Directors believe that from a
liquidity perspective there will be no negative impact. The
Directors continue to be committed to high standards of corporate
governance.
In order to effect the Delisting, DP World is required to obtain
prior approval from its shareholders pursuant to the UK Listing
Rules. Accordingly, at the Extraordinary General Meeting to be held
on 18 December 2014, a shareholder resolution, authorising the
Board to proceed with the Delisting will be proposed (Delisting
Resolution).
Conditional upon the Delisting Resolution receiving both general
and independent shareholder approval at the Extraordinary General
Meeting, DP World will apply to cancel its London listing and to
remove its securities from trading on the Main Market of the LSE.
It is anticipated that the Delisting will take effect on or about
21 January 2015, being in any event not less than 20 London
business days following the passing of the Delisting
Resolution.
NOTICE OF EXTRAORDINARY GENERAL MEETING AND SHAREHOLDER
CIRCULAR
An Extraordinary General Meeting will be held at DP World
Wheelhouse, Jebel Ali port on 18 December 2014. The purpose of the
Extraordinary General Meeting is to consider and, if thought fit,
to pass all proposed resolutions.
A circular containing further detail on both proposals outlined
in this announcement as well as to approve the previously announced
appointment of Mark Russell as an independent non-executive
director, and the notice convening the Extraordinary General
Meeting is shortly expected to be made available to shareholders
via the DP World website. (www.dpworld.com)
- END -
Investor Enquiries
Redwan Ahmed Jasmine Lindsay
Investor Relations Investor Relations
DP World Limited DP World Limited
Mobile: +971 505541557 Mobile: +971 504220405
Direct: +971 48 080 842 redwan.ahmed@dpworld.com Direct: +971 48 080 812
Jasmine.lindsay@dpworld.com
Media Enquiries
Sarah Lockie
Corporate Communications
DP World Limited
Mobile: +971 48080835
Direct: +971 50 659 6944
sarah.lockie@dpworld.com
Advisers
Moelis & Company (Financial adviser to DP World)
Yorick van Slingelandt Elliot Richmond
Direct: +971 4 304 5000 Direct: +44 (0)20 7634 3500
Citi (Joint financial adviser and Joint Sponsor to DP World)
Alex Carter Simon Lindsay
Direct: +44 (0)20 7986 4000 Direct: +44 (0)20 7986 4000
Deutsche Bank (Joint financial adviser and Joint Sponsor to DP
World)
Richard Sheppard Ben Lawrence
Direct: +44 (0)20 7545 8000 Direct: +44 (0)20 7545 8000
About EZW Group
The EZW Group is comprised of five business units: (i) JAFZ;
(ii) JAFZA Enterprises FZE (Enterprises); (iii) EZW Corporate
(Corporate); (iv) Business Center World FZE (BCW), and (v) Emerging
Business Units (EBU). JAFZ is the EZW Group's primary business unit
and comprised 97 per cent of the EZW Group's revenue and operating
profit for the year ended 31 December 2013.
JAFZ
JAFZ, one of the largest free zones in the GCC, is a major
industrial and commercial development in Dubai, United Arab
Emirates that is strategically located adjacent to Jebel Ali
port.
JAFZ has a 99 year concession and usufruct agreement with Jebel
Ali Free Zone Authority (JAFZA) which runs until 2106. These
agreements provide JAFZ with the exclusive right to provide certain
administration services as well as the right to lease facilities to
tenants, renew a lease or grant a new lease to a tenant for
occupying any part of the concession area (with JAFZ being the
landlord).
JAFZ's primary business activity consists of providing and
renewing leases in relation to land, warehouses, offices, onsite
residential accommodation, retail outlets, showrooms and
workstations. JAFZ also provides registration and licensing
services as well as administration services, such as assisting
tenants interface with various UAE Governmental authorities,
ministries and departments in relation to immigration, work visas
and other matters.
The free zone offers a number of incentives to foreign companies
to establish operations in the free zone, including 100 per cent
foreign ownership of establishments and zero corporate and income
tax rates for a minimum period of 50 years from the date of
commencement of business in the free zone. JAFZ's leasing activity
is characterised by high occupancy levels, stable and recurring
revenue streams, and long-standing, diversified customer
relationships.
As at 30 June 2014, approximately 7,362 companies were operating
in the free zone from over 134 different countries (with
approximately 100 "Fortune 500" and large multinational companies
as tenants). For the half year ended 30 June 2014, approximately 45
per cent of the free zone's total customers had a geographic base
(based on country of incorporation) in the GCC and Middle East, 21
per cent in Europe, 21 per cent in Asia and 13 per cent in America
and Africa.
Other business units of the EZW Group
-- Enterprises: develops customised warehouse solutions in the
free zone to meet bespoke needs and operational requirements of
customers.
-- Corporate: manages JAFZ and two other free zones in Dubai,
namely the Dubai Auto Zone and TechnoPark. Dubai Auto Zone is an
automotive industry specific free zone. TechnoPark is a
research-driven business and industrial park located just outside
JAFZ's south zone.
-- BCW: provides fully-equipped temporary office facilities on
short-term leases (typically 3 to 12 months) in the free zone and
is managed by Regus PLC.
-- EBU: manages and owns 40 per cent of Djibouti Dry Port SAFZ,
an industrial zone in East Africa. EBU also comprises of offshore
land owned in India and the United States.
The EZW Group has an experienced management team which has been
able to adapt to the changing market conditions and corresponding
changes in the needs of its customers. As of 30 June 2014, the EZW
Group employed 405 employees across all its business units, with
JAFZ staff comprising 333 employees.
About DP World
DP World has a portfolio of more than 65 marine terminals across
six continents(1) , including new developments underway in India,
Africa, Europe and the Middle East.
Container handling is the company's core business and generates
more than three quarters of its revenue. In 2013, DP World handled
55 million TEU (twenty-foot equivalent container units). With its
committed pipeline of developments and expansions, capacity is
expected to rise to more than 100 million TEU by 2020, in line with
market demand.
DP World has a dedicated, experienced and professional team of
around 30,000 people serving its customers around the world, and
the company constantly invests in terminal infrastructure,
facilities and people to provide quality services today and
tomorrow, when and where customers need them.
In taking this customer-centric approach, DP World is building
on the established relationships and superior level of service
demonstrated at its flagship Jebel Ali facility in Dubai, which has
been voted "Best Seaport in the Middle East" for 20 consecutive
years.
www.dpworld.com
(1) As of July 2014.
Forward-Looking Statements
This document includes forward looking statements, including,
without limitation, statements containing the words "believe",
"anticipate", "expect", "intend", "aim", "plan", "predict",
"continue", "assume", "positioned", "may", "will", "should",
"shall", "risk" and other similar expressions that are predictions
of or indicate future events and future trends or identify
forward-looking statements. These forward-looking statements
include all matters that are not current or historical facts. In
particular, the statements regarding the DP World Group's and the
EZW Group's strategy, future financial position and other future
events or prospects are forward-looking statements.
Undue reliance should not placed on forward-looking statements
because they involve known and unknown risks, uncertainties and
other factors that are in many cases beyond the control of the DP
World Group or the EZW Group. By their nature, forward-looking
statements involve risks and uncertainties because such statements
relate to events and depend on circumstances that may or may not
occur in the future. Forward-looking statements are not indicative
of future performance and the actual results of operations and
financial condition of the DP World Group or the EZW Group, and the
development of the industry in which the DP World Group or the EZW
Group operates, may differ materially from those made in or
suggested by the forward-looking statements contained in this
announcement.
These forward-looking statements reflect DP World's and EZW's
judgement at the date of this document and are not intended to
provide any representations, assurances or guarantees as to future
events or results.
Other than as required by applicable law or regulation, the DP
World undertakes no obligation to update or revise any
forward-looking statements or other information, and will not
publicly release any revisions it may make to any forward-looking
statements or other information that may result from events or
circumstances arising after the date of this announcement.
No statement in this document is intended to constitute a profit
forecast for any period, nor should any statement be interpreted to
mean that earnings or earnings per share will necessarily be
greater or lesser than those for the relevant preceding financial
periods for either DP World or EZW, or the DPW Group as enlarged by
the acquisition of EZW, as appropriate.
This announcement shall not be construed as a prospectus or an
offer to sell, or a solicitation of an offer to buy, any security
or any business or assets, make any voting decision in relation to
any transaction, nor to enter into any agreement or contract with
any person. Shareholders should not make any voting or other
decision in relation to the transactions or securities referred to
in this announcement except on the basis of the information in the
circular (together with any supplementary circular, if relevant) to
be published by the DP World in due course in connection with the
proposed transactions.
Important Notice
Moelis & Company is authorised and regulated by the Dubai
Financial Services Authority and is a branch of Moelis &
Company UK LLP, which is authorised and regulated in the United
Kingdom by the FCA. Moelis & Company has been appointed by DP
World as financial adviser in connection with the acquisition, and
is acting exclusively for DP World and for no one else in
connection with the acquisition. Moelis & Company will not be
responsible to anyone other than DP World for providing the
protections afforded to clients of Moelis & Company nor for
providing advice in relation to the acquisition or any other matter
referred to herein.
Citigroup Global Markets Limited, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting exclusively for DP World as joint
financial adviser and joint sponsor and is not acting for anyone
else in connection with the matters set out in this announcement
and shall not be responsible to anyone other than DP World for
providing the protections afforded to its clients or for providing
advice in connection with the matters set out in this announcement
or any other matter referred to herein.
Deutsche Bank AG, is authorised under German Banking Law
(competent authority: BaFIN Federal Financial Supervisory
Authority). Deutsche Bank AG, London Branch is further authorised
by the Prudential Regulation Authority and is subject to limited
regulation by the Financial Conduct Authority and the Prudential
Regulation Authority. Details about the extent of its authorisation
and regulation by the Prudential Regulation Authority and
regulation by the Financial Conduct Authority are available on
request. Deutsche Bank AG, London Branch is acting exclusively for
DP World as joint financial adviser and joint sponsor and is not
acting for anyone else in connection with the acquisition and will
not be responsible to anyone other than DP World for providing the
protections afforded to clients of Deutsche Bank AG, London Branch
nor for giving advice in relation to the acquisition or any matter
or arrangement referred to in this announcement.
(1) For the year ended 31 December 2013
2 Pro-forma profit before tax excludes the one off waiver of
loan from parent company and interest associated with related-party
receivables not subject to the acquisition
This information is provided by RNS
The company news service from the London Stock Exchange
END
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