When Dubai International Capital clinched its deal to buy UK engineering company Doncasters this past December, it appeared the £700 million ($1.2 billion; €1 billion) deal would go through the standard regulatory hoops and then close early this year.
However, in the wake of the political firestorm sparked by the Dubai Ports World acquisition of Peninsular and Oriental Steam Navigation Co. (P&O), the Doncasters buyout will now face more scrutiny, as the US has reportedly initiated a national security probe into the deal.
The state-owned DP World, based in the United Arab Emirates, agreed to acquire London’s P&O for $6.8 billion this past February. A number of US politicians, expressing concern over the possibility of a terrorist connection, came out in force against the transaction, citing that P&O controls strategic ports across the US in areas such as New York, New Orleans and Philadelphia.
The DP World ports deal has now spiralled into a hotly contested political debate in the US, and Dubai International’s bid to buy Doncasters is facing the same scrutiny. The Washington Post was the first to report this morning that the US Committee on Foreign Investment has launched a probe into the national security ramifications of the transaction.
Doncasters is a manufacturer of mechanical components for the aerospace and industrial gas turbine industries. RBS Equity Finance sold the company after taking it private in a $261 million deal in 2001. Doughty Hanson, Bain Capital and Candover were also reported to have shown an interest in the property.
Dubai International Capital is the private equity arm of Dubai Holding, Crown Prince Mohammed al-Maktoum’s investment company. The firm has been an active investor in Europe in the past, completing an £800 million buyout of London-based wax museum operator Tussauds Group and also making a £1 billion investment in car maker DaimlerChrysler.
The firm in January signed an agreement with US industrial giant General Electric to work together to identify and invest in high-tech projects across the Middle East and North Africa.
Calls to Dubai International were not returned by press time, but an article issued by the Associated Press quoted Doncasters as expressing confidence that the deal will in fact close.