Shares in ports operator P&O - which has an operation at the Hams Hall freight terminal near Birmingham - soared nearly 40 per cent yesterday after confirmation of a takeover approach from Gulf-stateowned Dubai Ports World.
As investors speculated that the approach could spark off a fierce bidding war, dealers and analysts said other likely contenders could include Denmark's Moeller-Maersk, Singapore government investment agency Temasek Holdings and Hong Kongbased Hutchison Whampoa Ports.
"This is the fourth-largest global container port operator and the only sizeable one that is institutionally owned, making it a unique set of assets," Dresdner Kleinwort Wasserstein analysts said.
P&O shares rose as high as
429.75 following the news, their highest since February 2000, valuing the firm at a figure well in excess of £3 billion.
Dresdner said a price as high as 500p a share was possible.
P&O is the world's only remaining listed global ports operator, making it an attractive target for larger rivals looking to expand in the fastgrowing container terminal market.
Its stock hit a four-year high in May on speculation Temasek was building a stake in the group.
The company strengthened its board last week with new appointments and is close to winning UK government approval for a £1.5 billion ports and business centre project on the Thames east of London.
P&O, whose full name is Peninsular & Oriental Steam Navigation Co, earns 70 per cent of its profits from ports in Asia, the Americas and Asia.
Started in 1840, P&O has spun off or sold its cruise ship operations in the past five years, though it still owns a ferries business operating between Britain and France which was scaled back in the past year as part of a strategic review.
P&O has radically restructured over the past two years and posted losses of £210 million in March for its last financial year.
Problems have mounted in its ferries division, which has seen passenger and tourist vehicle numbers fall sharply due to duty-free changes and the growth of low-cost airlines.
P&O responded last year by cutting four of its 13 routes and reducing its number of ships from 31 to 23, resulting in around 1,200 job cuts.
However, the global shipping industry has enjoyed a boom thanks to China's roaring economy, although recently freight rates for containers and dry bulk have declined from record highs due to slowing China demand and an expected glut of container ships.
Merrill Lynch estimates the overall container terminal market is expected to grow 11.2 per cent in 2005 and 10.6 per cent in 2006.
"From a potential acquisition perspective, P&O is the purest play on global container terminals," it said.