Both DP World and PSA see P&O's port assets as the only major expansionist acquisition remaining on the global gaming table. DP Ports has expressed a desire to maintain and build P&O's ferry operations, while PSA has been non-committal on that subject, raising concern over job security in the sector should PSA prevail.

As reported in MJ last month, P&O's agreement to what was initially seen as a generous DP World offer rapidly pushed the value 12% higher on speculation about rival bids. PSA added fuel to the fire by purchasing additional P&O shares at 460p. These give PSA less than 5% of P&O, far below the 25% required to block DP World's offer but sufficient to gain leverage with regard to possible deals over the distribution of P&O assets.

P&O adviser Citigroup asked the Takeover Panel to flush out Temasek regarding its intentions but the panel refused on the basis that a P&O shareholder meeting scheduled for 20 January would imposes its own deadline. The formal approach from PSA came 10 days before that deadline.

Success for PSA would see it competing with Hong Kong based rival Hutchison Port Holdings to be the world's largest container terminal operator and would make it less dependent for profitability on its Port of Singapore. Should DP World succeed in buying P&O it would become a much more significant global rival to PSA.

At the time of writing most analysts were expecting DP World to come back with an offer above 500p per share.

MJ Information No: 21419