State-owned Dubai Ports World said on Monday it had agreed to sell its U.S. port operations to an American International Group unit after relinquishing control of them to allay concerns about U.S. national security.
DP World will conclude its deal with AIG Global Investment Group in the first quarter, the Gulf Arab company's Chief Executive Mohammad Sharaf told Reuters on Monday. He declined to give a value for the deal.
"We have reached a deal covering 100% of the U.S. assets," Sharaf said. "It will be a cash deal."
DP World took over facilities at six major U.S. ports when it acquired Britain's Peninsular & Oriental Steam Navigation (P&O) for $6.8 billion in February, becoming the world's third-largest container port operator.
The administration of President George W. Bush approved DP World's acquisition of facilities in New York, New Jersey, Philadelphia, Baltimore, Miami, Tampa and New Orleans.
But lawmakers threatened to block the deal, saying they feared giving a state-owned Arab company control of U.S. port terminals would create a threat to national security.
With a political firestorm threatening to become a diplomatic crisis, DP World announced it would sell P&O's U.S. assets at the behest of Dubai's ruler, and hold them separately until a suitable buyer could be found.
Those arrangements would remain in place until the deal was completed and cleared by regulators, said Sharaf.
"Unfortunately we won't have a U.S. presence once the deal goes through," Sharaf said, adding that the deal had not been discussed with American politicians. "We don't expect any problems with this deal because AIG is an American company."
P&O's U.S. assets also include stevedoring operations at 16 locations along the eastern and Gulf of Mexico coasts and a passenger terminal in New York City.
"The price we received was fair," said a DP World statement issued later, quoting Chairman Sultan bin Sulayem.
The forced capitulation of a government-controlled company in the United Arab Emirates, a U.S. ally and frequent port of call for American warships, reinforced Arab concerns that their U.S. assets could be targeted for security reasons.
Some Arab investors said at the time that the row smacked of racism.
U.S. critics of the deal, who included both Democrats and members of Bush's Republican Party, note that two of the Sept. 11 hijackers came from the UAE and that the country once recognized the Taliban government in Afghanistan.