DP World, the Dubai state-backed ports operator was poised to secure control of P&O today after its rival Port of Singapore Authority (PSA), dropped out of the £3.9 billion bid race for the world's fourth-largest ports group.

Shares in P&O lost nearly 4 per cent of their value after PSA said it was not prepared to match or trump DP World's 520p a share offer. Management has already recommended DP World's increased bid.

As he reiterated the board's backing for DP World, Sir John Parker, P&O's chairman, said: "The P&O directors recommend unanimously the DP World revised offer and look forward to putting it to stockholders. The combination of P&O and DP World has a compelling strategic logic and will create significant opportunities for both businesses and their employees."

Having risen above the value of both bidders' offers - to give P&O a market value of more than £4 billion - the shares lost 20.5p to 517p in the minutes following PSA's withdrawal.

Although it said buying P&O would have offered "an attractive opportunity to add to our global portfolio", PSA said its earlier offer of 470p represented a "full and fair value" for the ports group.

"For PSA, to pay more than this price would not be compatible with commercial business sense and PSA's future success," the group said.

PSA is owned by Temasek Holdings, a Singapore government investment agency that already owns 4.1 per cent of P&O.

DP World is owned by the state of Dubai and had its preliminary offer for P&O accepted late last year before the ownership battle erupted.

The apparent sealing of the fate of P&O came days before shareholders in the ports group were due to vote on DP World's bid, which comes in the form of a scheme of arrangement.

Sir John had undertaken not to postpone the meeting unless PSA had returned with a bid of at least £4.1 billion, or 546p a share.

Despite the high level of P&O's share price - which suggested investors believed that PSA was still in the race - the notion that the Singapore group was ready to drop its interest began to circulate early this week.

Sir John’s commitment to DP World would not have prevented PSA from launching a bid of between 520p and 546p. However, had it done so it would have had to rely on P&O shareholders lending support to its offer - in a process that would require regulatory approvals and take months to complete.

DP World’s offer already has regulatory approval.

For detailed data on P&O shares click here

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