Six major U.S. port operations will come under U.S. ownership after Dubai Ports World cleared a $50 million hurdle Friday to end a yearlong political conflict over security at the nation's cargo terminals.
DP World, based in United Arab Emirates, agreed in December to sell its U.S. ports operations to AIG Global Investment Group, following months of criticism that the UAE firm could not be trusted running the security-sensitive shipping apparatus.
That deal suddenly foundered this week when the Port Authority of New York and New Jersey, which must consent to the sale, asked the two companies for tens of millions of dollars in cash and future infrastructure work at the Port Newark Container Terminal.
The business brinkmanship led two U.S. senators on Thursday to dub the Port Authority's demands greedy and to threaten political payback if the agency didn't back down.
Late Friday, officials said they had struck a deal to resolve the impasse, with AIG agreeing to make more than $40 million worth of infrastructure improvements, as well as a direct payment of $10 million to the Port Authority.
"We're pleased that we've reached an agreement that both protects our public investment and helps insure that AIG is a long-term partner in the health and growth of the ports," said Port Authority spokesman Stephen Sigmund.
DP World officials said the entire sale should be finalized in March.
AIG spokesman Chris Winans said the company was "extremely pleased" and looking forward "to a long and successful partnership with the Port Authority."
The latest standoff began when Port Authority officials asked for roughly $30 million in past improvements to the Port Newark Container Terminal — and a commitment from AIG for future infrastructure work. The companies said the agency originally demanded $84 million, and that the Port Authority was the last obstacle to completing the sale.
At that, Sens. Charles Schumer, D-N.Y., and Robert Menendez, D-N.J., found themselves in an odd position: coming to DP World's defense after more than a year of publicly ripping the company.
Federal aid used as leverage
Both senators on Thursday threatened the Port Authority with less federal aid if the agency didn't back down.
Schumer called Friday's deal fair and said he was glad the Port Authority "has come to its senses."
DP World is the world's largest marine terminal operator with 51 terminals in 24 countries. The sale agreement struck in December includes major U.S. seaports in New York/New Jersey, Philadelphia, Baltimore, Miami, New Orleans and Tampa, Fla.
AIG Global Investment Group is an asset management firm with more than $635 billion in assets. Its parent company is the New York-based insurance firm, American International Group Inc.
The deal also involves stevedoring operations in 16 locations along the eastern seaboard and Gulf Coast and a passenger terminal in New York.
The U.S. holdings were valued last year at roughly $700 million, but the companies did not disclose the sale price.