Denmark’s rapidly expanding DSV Panalpina has agreed to buy Kuwait-based Agility’s logistics business for $4.1bn in an all-share deal to create the world’s third-largest group by revenue among organisers of freight shipments.
Agility will become the second-largest shareholder in the combined company under the terms of the deal with an 8 per cent stake in return for its Global Integrated Logistics business.
Shares in DSV leapt 8 per cent by lunchtime trade in Copenhagen.
It is the latest example of dealmaking heating up in the logistics sector as companies seek greater economies of scale following a boom in ecommerce during the pandemic.
DSV had grown to become the fourth biggest freight forwarder, which involves organising shipments for manufacturers, through more than a dozen acquisitions in an industry that is key to the world’s supply chain.
The latest acquisition comes less than two years after it bought Panalpina for DKr37bn ($6bn).
The combination with Agility’s logistics arm, which last year generated $4bn of revenues and accounted for 30 per cent of the group’s earnings, will take it to number three behind DHL Supply Chain & Global Forwarding and Kuehne+Nagel.
In February, Switzerland’s Kuehne+Nagel bought Asian freight forwarder Apex for an undisclosed amount and China’s SF Holding acquired a 51.8 per cent stake in Hong Kong’s Kerry Logistics Network for $2.3bn in a push to become Asia’s leading logistics provider.
“Deal activity in the forwarding space is a frenzy of activity,” said Daniel Roeska, an analyst at Bernstein.
The deal will be funded through the issue of 19.3m new shares in DSV and it values Agility’s logistics unit at a multiple of 23.3 times earnings before interest and tax in the past 12 months.
The business last year, which employs 17,000 people, earned $129m on revenues of $4bn and the acquisition will help strengthen DSV’s air and sea transport capabilities, particularly in emerging markets.
The additional turnover would add 23 per cent on to DSV Panalpina’s revenues taking them to about $22bn.
“Global Integrated Logistics’ global network, industry competencies and strong market position in Apac and the Middle East complement DSV’s network well and will support our long-term value creation ambitions,” said Jens Bjorn Andersen, chief executive of DSV.
The Hedehusene-based group reported operating profit doubling in the first quarter compared with a year earlier and it upgraded its annual profit forecast on the back of sky-high global freight rates due to strong demand and constricted capacity.
Agility will retain its logistics park business, online freight platform and other subsidiaries such as fuel logistics and commercial real estate arms.
“This deal is one of the largest private M&A deals made in the Gulf Cooperation Council to date. We expect that this transaction will have a positive impact on shareholder’s equity and the company’s market value,” said Tarek Sultan, vice-chair of Agility.
Source: Economy - ft.com
