Dubai firm sells US ports to AIG

The six major US ports involved include New York and New Jersey

Dubai Ports World (DPW) has agreed to sell its US port operations to AIG Global Investment after American anger at the United Arab Emirates ownership.

When DPW took control of the six ports, as part of its purchase of P&O's ports in March, US politicians expressed fear at them being in Middle Eastern hands.

Chief executive Mohammad Sharaf said a cash deal had now been agreed "covering 100% of the US assets".

However, he did not put a value on the deal, to be concluded early next year.

Court battle

DPW initially acquired the UK's Peninsular & Oriental Steam Navigation Company (P&O) for $6.8bn in February, but then faced a court battle in March over its move.

Unfortunately we won't have US presence once the deal goes through DPW chief executive Mohammad Sharaf

The Court of Appeal in London rejected an attempt to block the deal by Miami-based Eller, a business partner of P&O in the US.

Eller had claimed that concerns about a United Arab Emirates-based company buying P&O's operations at six major US ports would harm its business.

Docks at New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia all came under DPW control, with the blessing of the Bush administration.

It also assumed ownership of lesser dockside activities at 16 other ports in the US.

'No problems'

But a powerful committee of the US House of Representatives voted to block the deal.

The House Appropriations Committee voted 62-2 for an amendment to block DPW operating the US ports.

"Unfortunately we won't have US presence once the deal goes through," Mr Sharaf said.

"We don't expect any problems with this deal because AIG is an American company."

At the time the ports were put up for sale in March, DPW estimated that they were worth a combined $700m.

Trade experts had said that the case set a damaging precedent for other Middle Eastern firms planning to invest in the US.