March 9 (Bloomberg) -- A Dubai-based company abandoned its effort to take over some operations at six major U.S. seaports after the U.S. Congress made clear it would block the deal.

DP World will sell its leases on the U.S. terminal operations ``to a U.S. entity,'' Edward Bilkey, the chief operating officer of DP World, said in a statement. The intent is to preserve ``the strong relationship between the United Arab Emirates and the United States,'' he said.

The company plans to make the transfer ``in an orderly fashion'' so it ``will not suffer economic loss,'' the statement said.

Reem al-Hashimy, commercial attaché of the United Arab Emirates Embassy in Washington, said in an interview that the ``U.A.E. government has decided to divest the assets from the case and that was really done primarily to salvage the relationship between the U.A.E. and the United States.''

The chairman of DP World, Sultan Bin Sulayem, confirmed the decision in a telephone interview. ``We have good relations with the United States and we are doing this to sustain those relations,'' he said. ``We are businessmen.''

The statements came hours after Republican congressional leaders told President George W. Bush that both the House and Senate would pass legislation to prevent the takeover.

The administration in January approved DP World's purchase of London-based Peninsular & Oriental Steam Navigation Co. after a 30-day review. Congressional criticism drove DP World to agree to a new 45-day review of the $6.8 billion deal.

Telling the President

The Bush administration urged Congress to delay judgment of the deal until that probe was finished. Republican congressional leaders met privately with Bush at the White House earlier today and told him Congress would vote to prevent the takeover.

Pressed for details after that meeting, House Speaker Dennis Hastert said the lawmakers told the president, ``We want to protect the American people'' and ``we will continue to do that.''

White House spokesman Dana Perino said administration officials were studying DP World's announcement and had no immediate comment.

Lawmakers Skeptical

Some House and Senate lawmakers said the DP World statement wasn't enough of a guarantee, and they want legislation banning the deal. Representative Mark Foley of Florida said he supports retaining a deal-killing provision on an emergency spending bill that was approved by a House panel yesterday.

``That gives us a safeguard,'' Foley said.

Senate Democrats, who won a procedural vote today that showed support for barring the takeover, said they would try to force a vote on a provision similar to the House's.

``We need to make sure all U.S. operations are removed,'' Charles Schumer of New York said. ``It must be a total break.''

Republican Senator John McCain of Arizona said DP World's announcement meant ``it's a problem solved.'' The company made the right decision because `we're in a firestorm here, an unnecessary one, but a firestorm,'' said McCain, who defended the takeover.

Minnesota Republican Norm Coleman said he would continue to push legislation to prevent any foreign-government ownership of U.S. ports.

Senate Republican Leader Bill Frist's chief of staff, Eric Ueland, said it hasn't yet been quantified how long the company would take to sell off the port operations, but that all sides want to allow the company time to obtain an acceptable offer.

``I think everyone wants to be respectful of their need to manage this as best they can so you don't turn it into a fire sale situation,'' Ueland said.

Deal Was Sealed

DP World's statement came less than two hours after the company announced completion of its purchase of P&O's worldwide operations. The deal ``makes DP World a top three global port operation, with 51 terminals in 30 countries across 5 continents,'' the company said. The value of the U.S. port operations amounted to one-tenth of P&O's business worldwide.

Overseas-based companies operate as many as 80 percent of American terminals, a shift that began when Jimmy Carter was in the White House. DP World would have assumed P&O leases on container-ship terminals in the ports of New York, Newark, New Orleans, Baltimore, Miami and Philadelphia.

American public opinion was inflamed by this prospect. In a Bloomberg/Los Angeles Times Poll released March 8, respondents opposed the takeover by a margin of better than 3 to 1.

House Vote

The House Appropriations Committee, by a margin of 62-2, attached an amendment to a $92 billion emergency spending measure last night that would block the port sale because of security concerns. The House planned to pass that measure next week.

Democrats in the Senate were on the verge of forcing a vote on similar legislation. One influential Republican, Charles Grassley of Iowa, told CNN he would vote to block the deal because ``I had 16 town meetings a week ago in my state, and very definitely, this is not a popular thing in grassroots Iowa.''

Republican Senator Richard Shelby of Alabama today said the vote in the House appropriations panel was ``more than a little strong message or a hint'' that lawmakers would not accept the takeover.

``This was a firestorm; it upset everybody,'' Shelby said in an interview.

DP World's decision was announced on the Senate floor today by Republican John Warner of Virginia, the chairman of the Armed Services Committee and a staunch defender of the administration's decision to approve the DP World's purchase.

Key Mideast Ally

Warner warned there would ``be a price to be paid'' if the U.S. scotched the deal.

Dubai is one of seven sheikdoms that make up the United Arab Emirates, which has been an important ally in the U.S. war against terrorism, sharing information and turning over suspects, Warner told reporters yesterday. The UAE also provides an important port for U.S. military vessels in the Middle East.

Warner had been preparing a last-ditch legislative effort to salvage the deal when he learned of the decision.

``I talked to company officials off and on throughout the morning,'' he told reporters. ``There was a good deal of exchange between our government and their government and decisions were made at the uppermost levels.''

``My own judgment is that this incident is behind us and we will go forward as we have in the last two or three years and continue to have a very strong relationship with the U.A.E. on all fronts as well as the other nations in that region: Qatar, Bahrain, Kuwait,'' Warner said.

`Muslim-Bashing'

General John Abizaid, commander of U.S. forces in the Middle East, said he was ``very dismayed by the emotional responses'' that surfaced during the controversy. It ``really comes down to Arab- and Muslim-bashing that is totally unnecessary,'' he told reporters.

Opponents of the deal said the UAE was one of three nations to recognize the Taliban as the legitimate government of Afghanistan. The Sept. 11 terrorists, two of whom were from the UAE, used the nation's banks to funnel money to their operation.

The controversy spilled over into a separate congressional debate on lobbying reform. Frist suspended that debate after the chamber refused to prevent a vote on blocking the takeover.

The Republicans couldn't come up with the 67 votes needed to prevent the Senate from considering an amendment to the lobbying legislation.

After the vote, Frist, a Tennessee Republican, said he would delay action on the lobbying and ethics legislation until the Senate sponsors approved a list of amendments and blocked unrelated proposals. He gave no date for resuming debate, and Schumer, the sponsor of the ports amendment, said he still wanted a vote on that issue.

``We've had a totally unrelated amendment injected, I believe, for partisan purposes,'' Frist said.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

Last Updated: March 9, 2006 17:22 EST