In a major consolidation of Dubai's maritime sector is buying 100% of shipyard group Drydocks World through a capital injection of $225m. The largest ship repair yard in the Middle East is being acquired by DP World's marine services arm P&O Maritime.
The shipyard sector has been hit hard by the downturn in the offshore market. The injection of $225m in capital is eight times Drydocks World 2016 annual EBITDA.
“Drydocks World bolsters our investment in the maritime sector through our subsidiary P&O Maritime. We are acquiring a market leader in the Middle East with the potential to deliver near term synergies and new revenue opportunities over the longer term, particularly in ship conversion and in areas where POM has existing expertise,” said Sultan Ahmed Bin Sulayem, DP World group chairman and ceo.
Meanwhile it is buying Maritime World, which owns 100% of DMC, for $180m.
DMC controls 2.3m sq m 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,” he said.
The acquisitions will increase DP World's net debt to 2.9 times to EBITDA compared to 2.6 times previously.