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Last Updated: Monday, 31 October 2005, 17:47 GMT
P&O jumps on hope of bidding war
P&O ferry
P&O made its last jouney to Le Havre last month after cutting costs
Shares in ports and ferry operator P&O have surged amid speculation the group may become the target of a bidding war.

On Sunday, the firm confirmed it had received a takeover approach - thought to be from Dubai Ports World, owned by the United Arab Emirates government.

But press reports have also suggested that Denmark's AP Moeller Maersk and Hong Kong conglomerate Hutchison could now join the bidding.

As a result, shares in P&O closed up 30% at 404 pence on Monday.

On Sunday, P&O said it had "received a preliminary contact... which may or may not lead to an offer".

Gulf interest?

The Sunday Times named Dubai Ports World as the interested party, saying it had hired Deutsche Bank to advise it on a bid which could be worth as much as 3bn ($5.35bn).

Because of China the shipping industry is in a boom, and a lot of companies are making a lot of money
Frank Kennedy, maritime consultant

The Gulf firm manages ports in Asia, Europe, Australia and South America, and P&O owns ports around the world.

Last week P&O, which has been slimming down its ferries and property arms, cut back earnings expectations for its key ports business.

In the past year there has been strong growth at its Asian ports, but that has been offset by more sluggish economic conditions in the UK and Australia.

Any takeover would bring to an end 168 years of history at the UK based firm - whose full name is Peninsular & Oriental Steam Navigation - which started life carrying cargoes to all corners of the British Empire.

Frank Kennedy , maritime consultant for the UK firm Murray Fenton Middle East based in Dubai, said the company would be a popular target.

Industry revival

"Four or five years ago the industry was in a lull, ship owners were losing money, there was a lot of problems and ports were losing money," he told BBC Radio 4's Today programme.

"Now because of China it's in a boom and a lot of companies are making a lot of money."

He added that P&O could be an attractive target for the Dubai government which has "evolved and expanded" its ports operations from the United Arab Emirates where it started off with two ports into port management around the world.

"I think when they (the Dubai government) see an opportunity they will take it," Mr Kennedy added.

In August, P&O unveiled a sharp dip in first-half earnings with pre-tax profits dropping to 30.6m from 53.4m during the same period last year.

In an effort to cut costs P&O has sold properties, slashed jobs and cut routes at its loss-making ferry operations as it lost market share to budget airlines.

And in June it offloaded its 25% stake in Dutch shipping company P&O Nedlloyd, leading to a 187.9m one-off gain.

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