Danish giant’s US purchase underlines consolidation amongst global players
Nine months after news that Danish transport and logistics company DSV was in talks with US rival UTi, a US$1.35 billion (A$1.84 billion) takeover deal has been struck.
While dwarfed by Japan Post’s A$8 billion purchase of Toll, the deal continues a consolidation trend at the higher end of the global market and shows European operators are just as keen to buy their American rivals as the reverse.
It comes five months after US firm XPO Logistics’ US$3.5 billion purchase of French logistics and trucking firm Norbert Dentressangle, and just a month after it swallowed its fellow American trucking firm Con-way for US$3 billion.
In DSV’s Hedehusene headquarters, just outside Copenhagen, the company saw fit to offer a 34 per cent premium over UTi’s share price to get the deal done.
“It is a great pleasure for me to announce the first step towards the combination of UTi and DSV,” DSV chairman Kurt K Larsen says.
“We complement each other perfectly, both in terms of business activities and geography. Together, we will be even stronger and able to capitalise on business synergies as well as a greater global reach to the benefit of shareholders, customers and employees.
Both firms have a presence in Australia.
Supply chain services and logistics company Uti has reported annual revenues of US$ 3.9 billion but that is seen as underwhelming in a competitive international market.
“We are operating in an industry where increasingly scale is critical,” UTi chairman Roger MacFarlane says.
“Joining forces with DSV delivers substantially greater client value and many future opportunities for our people while it is financially very attractive for our shareholders.
“As a result, the Board of Directors of UTi has unanimously approved the agreement with DSV and strongly recommends that our shareholders accept the offer.”
Explaining the move, DSV says acquisitions are an integral part of its growth strategy – in the last three years, it has bought Seatainers Group, Ontime Logistics, SBS Worldwide Holdings and Swift Freight.
UTi is expected to increase DSV’s annual revenue by about 50 per cent, “creating one of the world’s strongest transport and logistics networks”.
In 2014 terms, the combined firm would have revenues of about US$ 13 billion and the combined workforce will grow to 44,000 people in 84 countries, 848 offices and 339 logistics facilities.
“The Air & Sea Division will be significantly strengthened, and DSV will increase its industry specific capabilities across all divisions.
“Furthermore, DSV will now be truly global within contract logistics and expand into road freight activities outside Europe. This will enable the company to offer its customers a broader range of services.
“The combined companies will have a more balanced geographical footprint with approximately 61% of revenue in Europe, Middle East and North Africa, 17% in Americas, 16% in Asia (APAC) and 6% in Sub-Saharan Africa.”