Yet Another Dubai Deal

Posted on March 20, 2006

Those who were saddened by the demise of the Dubai Ports deal can take heart: apparently yet another Dubai-based company is now poised to take over another U.K. company that provides crucial products for the U.S. This company makes military equipment for the U.S. military. The company is now complaining about the fact that American citizens will no doubt want closer scrutiny of this deal, as well.

Dubai, which agreed this month to sell its interest in U.S. ports, said its $1.2 billion takeover of a U.K. company with U.S. plants that make military equipment is delayed while the authorities investigate security concerns. Dubai International Capital LLC, which is owned by the government of the Persian Gulf emirate, and Doncasters Group Ltd. agreed to delay the transaction by as many as two months from March 31 while government agencies review the purchase, Sameer Al Ansari, Dubai International's chief executive, said in an interview today.
"After what happened with Dubai Ports, the government is looking at this deal more closely," Al Ansari said after a press conference in Dubai announcing an agreement with HSBC Holdings Plc. Dubai's bid may ignite a political debate in the U.S. similar to that caused last month by the emirate's $6.8 billion purchase of London-based Peninsular & Oriental Steam Navigation Co. DP World had to agree to sell interests in six U.S. terminals. Revenue from Doncasters' nine U.S. plants, which make parts for tanks and military aircraft, account for about 40 percent of total sales.
"If this deal isn't approved by the U.S., it wouldn't proceed," said Angus Blair, chief executive of Mena Financial, a London-based company which advises foreign companies about doing business in the Middle East.
*****
The Committee on Foreign Investment, a federal body which considers the sale of U.S. assets to foreign companies, started a detailed 45-day investigation into the Doncasters agreement at the end of February, said Al Ansari. Al Ansari declined to comment on whether the transaction will go through.
*****
Kuwait's state-controlled PWC Logistics, which won a U.S. military contract last year worth as much as $14 billion to feed troops in Iraq, agreed in July to buy Santa Ana, California-based GeoLogistics Corp. for $454 million. GeoLogistics is an international freight management company with operations in more than 100 countries, according to its Web site.

Apparently, the Dubai Ports deal was just the tip of the iceberg. Dubai-based companies appear to be embarking on a spending spree to purchase companies that provide crucial services and material to the United States. It's time for a full Congressional review of the procedures and rules under which foreign companies and foreign governments can purchase and/or control essential U.S. assets and services.