DP World agrees to buy EZW

DP World agrees to buy EZW

Marine terminal operator DP World announced that it will buy Economic Zones World (EZW), an industrial and logistics Infrastructure Company in Dubai. According to reports, DP World has agreed to acquire EZW for $2.6 billion. Shareholders of the company have still to approve the EZW purchase.

Currently, both the companies are majority owned by Dubai World, an investment company that manages businesses and projects for the Dubai government.

Government of Dubai and state-linked companies face about 85 billion of debt maturing in 2015 to 2019. The investment company itself has to pay loan of about $4.4 billion, which is going to mature in May 2015. In order to deal with the situation, DP World and EZW have been moving funds that they raised across the network.

According to the company, the purchase of EZW will include net debt of about $859 million. Currently, EZW has about five business units that include Jebel Ali Free Zone and JAFZA Enterprises.

DP World, which is one of the world's largest port operators, said that the acquisition will also need approval from shareholders. The company also stated that the purchase will increase DP World's earnings by about 15% and generate 7% return on money spent in full financial year.

According to the company, the acquisition will be funded from the cash that the company has.

DP World also stated that it will urge its shareholders to delist the company's shares from the London Stock Exchange, while it would maintain its NASDAQ Dubai listing. The port operator said that the process of delisting is expected to take place on January 21.

Listing at the London Stock Exchange is thinly traded due to small free float.

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