DUBAI: DP World has agreed to buy the Jebel Ali Free Zone (JAFZ) and other assets of Economic Zones World (EZW) for US$2.6 billion and assume debt of US$859 million.
EZW, a provider of industrial and logistics infrastructure, is owned by Port and Free Zone World (PFZW) and includes JAFZ, JAFZA Enterprises, EZW Corporate, Business Center World, and Emerging Business Units.
JAFZ, which represents 97 percent of EZW revenue, is a 57 sq. km. logistics park next to Dubai's Jebel Ali port and an integral part of DP World's supply chain offering.
The company says the proposed acquisition is expected to generate more than a seven percent return on capital employed in its first full financial year following completion and to increase DP World's adjusted EBITDA margin to nearly 50 percent.
Chairman Sultan Ahmed Bin Sulayem commented: "The acquisition of EZW represents a strategic and commercial opportunity that will benefit our customers as well as our Company. Jebel Ali Port and Free Zone support and drive the growth of Dubai and the wider region of some two billion people. Together, we will be able to offer seamless supply chain services to shippers and shipping lines, linking sea, road and air across the port and the free zone to the new Al Maktoum Airport via the Dubai Logistics Corridor to help them further improve efficiency."
In 2013, EZW generated revenue of US$430 million, EBITDA of US$348 million and a pro-forma profit before tax of US$221 million.
DP World says the proposed acquisition is a "related party transaction" because PFZW and DP World are majority owned by the government of Dubai. And with 99 percent of its shares now traded on the Dubai NASDAQ, the company has applied to de-list DP World's shares from the London Stock Exchange