DP World Buying Drydocks World, DMC

DP World will be splashing USD 405 million for the acquisition of Dubai’s ship repair business Drydocks World LLC (Drydocks) and Maritime World LLC, the 100% owner of Dubai Maritime City (DMC).

The Dubai-based port operator said the purchases would be made by means of a capital injection of USD 225 million.

The acquisition of Drydocks, the largest ship repair yard in the Middle East, specializing in ship and rig repair, is conditional on the company’s restructuring process, among other things.

“The business delivers stable revenues and has specialist capabilities in niche ship newbuilds and conversions,” DP World said.

DP World added that Drydocks’ acquisition will integrate well into P&O Maritime (POM), which is DP World’s 100% owned maritime services subsidiary. On a proforma basis, the USD 225 million capital injection into Drydocks World represents a 2016A EBITDA multiple of 8.0x.

“As a global trade enabler, we have been targeting a broader strategy to grow complementary sectors in the global supply chain such as industrial parks, free zones and logistics adding further value for all our stakeholders,” Sultan Ahmed Bin Sulayem, Group Chairman and CEO, DP World, said.

DMC, adjacent to DP World’s Port Rashid, is a maritime-focused commercial and industrial park, which extends to 2.3 million sqm on a man-made peninsula and provides Economic Zones World FZE additional land as an alternative to the highly-occupied Jebel Ali Free Zone.

“Dubai Maritime City provides us with stable leasing income from DMC’s existing industrial zone and spare capacity to develop industrial and commercial activities for the maritime sector in a prime location of Dubai. We aim to develop the best-in class Maritime City serving the needs of the maritime industry and leveraging on our expertise and experience from our ownership of the Jebel Ali Free Zone. We are consequently well positioned to deliver significant value in the medium term.”

“Overall, these transactions will enhance our position as a leading maritime services provider, and we look forward to leveraging on our proven track record to accelerate growth and deliver stakeholder value,” Bin Sulayem added.

As explained, the acquisitions are expected to be earnings accretive from the first full year of consolidation. On a proforma basis, DP World’s net leverage as of 1H2017 would be 2.9x Net Debt to EBITDA with these acquisitions compared to the reported 2.6x.

DP World expects both transactions to close before the end of the first quarter of 2018.