DSV acquisition of UTi looks like a go for 2016

If at first you don’t succeed… For the second time in the last 12 months, Danish logistics group, DSV, has made a bid to to acquire U.S.-based UTi Worldwide. This time, the offer was accepted, for US$1.35 billion, or $7.10 cash per each UTi share, representing a 50 percent premium relative to UTi’s closing trading price on Oct. 8.

The transaction has been unanimously approved by both UTi and DSV’s boards of directors.  UTi had revenue of $3.9 billion, with a loss of $6 million in the 12 months ending in July this year, whereas DSV reported revenue of $7.7 billion with EBITA of $505 million. UTi has 21,000 employees in 58 countries, but once the deal is approved by regulators, the new combined DSV/UTi workforce will number 44,000 people in 84 countries, with 848 offices and 339 logistics facilities.

DSV said that this acquisition in expected to increase its annual revenue by approximately 50 percent, creating one of the world’s strongest transport and logistics networks. The Loadstar said that a combined DSV/UTi would become the fourth-largest global 3PL behind DHL, Kuehne + Nagel and DB Schenker, in terms of revenue, with annual earnings of $12.9 billion, and the seventh-largest airfreight forwarder, with a projected 600,000 tonnes of cargo transported.

DSV, founded by a group of 10 truckers in 1976, has been growing its business through previous acquisitions, including Frans Maas, ABX Logistics and DFDS Transport.  Kurt K. Larsen, DSV’s chairman of the board, said the two companies “complement each other perfectly, both in terms of business activities and geography.” The combined force will now have a more balanced geographic foothold, with 61 percent of its revenue coming from business in Europe, the Middle East and North Africa (EMEA); 17 percent in the Americas; 16 percent in Asia; and 6 percent in the sub-Saharan African region.

“We are operating in an industry where increasingly scale is critical,” said Roger MacFarlane, chairman of UTi’s board. “Joining forces with DSV delivers substantially great client value and many future opportunities for our people while it is financially very attractive for our shareholders.”

The transaction is pending approval of relevant regulatory agencies, with an expected closing date sometime in the first quarter of 2016.

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