Bidding wars ahoy as state firms drive global ports consolidation

If anyone was surprised to see Singapore Inc raise the stakes this week for the global assets of Britain's venerable Peninsular & Oriental Steam Navigation, they shouldn't have been.

The ambitious PSA International, Singapore's overseas port investment arm, never ruled out a counter-bid to Dubai's #4.43 ($60.78) per share offer that the P&O board approved last month.

This week's proposal, more than any other in the recent flurry of port acquisitions, proves the hugely lucrative container terminal operating industry has truly entered an era of state-funded consolidation.

Senior PSA officials privately told Below Deck after last year's US$925 million outlay for a minority share in Hutchison's Hongkong International Terminals that the endgame was to become the world's biggest terminal operator by volume.

Their proposal for P&O - albeit hugely conditional on the successful completion of due diligence, board approval and pension negotiations - would achieve that, assuming PSA keeps the portfolio together, which, at the moment, is a big if.

News that PSA has already had discussions - informal or otherwise - on offloading several of P&O's assets should also come as no surprise. There is nothing in the asset portfolio of Temasek Holdings, PSA's state-owned parent, to suggest it would relish the challenge of converting P&O Ferries into a profitable enterprise.