In a bidding war, Dubai Ports World last month raised its offer to US$6.9 billion (euro5.7 billion) for the company, trumping a US$6.3 billion (euro5.2 billion) offer from PSA, a unit of Singapore's government-owned investment company, Temasek Holdings Pte.

"PSA has decided not to increase its offer and will therefore no longer pursue the acquisition of P&O," a statement from the Singapore company said.

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

Founded in 1837, P&O carried cargo throughout the British empire to Sydney, Calcutta, Singapore, Hong Kong and other colonies in its heyday.

The addition of P&O's 29 ports around the world would have helped Singapore's PSA, the second-biggest container port operator in the world, to gain ground on leader Hutchison Whampoa of Hong Kong.

After PSA's announcement, Standard & Poor's Ratings Services said it affirmed its corporate credit rating on Singapore's PSA Corp Ltd. at 'AAA' and removed it from a credit watch list warning of possible negative fallout.

"The outlook is stable," Standard & Poor's said in a statement.

"Despite PSA's decision not to pursue the P&O acquisition, its business position should remain strong as the second-largest global port operator," Standard & Poor's said.

"Without the need to borrow to finance this acquisition, credit measures should remain sound," it said. However, the analysis said those measures "are not likely to return to levels before 2002, due to lower port charges aimed at addressing competition issues and higher debt level to fund its previous overseas investments."

In a statement, P&O Chairman Sir John Parker thanked PSA's leadership "for their professionalism and courtesy throughout this process."

"The P&O Directors recommend unanimously the DP World revised offer and look forward to putting it to Stockholders," the statement said. "The combination of P&O and DP World has compelling strategic logic and will create significant opportunities for both businesses and their employees."

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