Denmark's DSV to acquire US peer UTi for $1.35 bn
10 October 2015
Danish logistics company DSV Group yesterday struck deal to buy US rival UTi Worldwide Inc for approximately $1.35 billion, aiming to expand its operations outside Europe and create one of the world's strongest transport and logistics networks.
The move marks further possible consolidation in the logistics sector, after two major deals earlier this year.
The Danish company, which has a track record of expanding business through acquisitions, expects to boost its annual revenue by 50 per cent through the deal.
DSV has offered $7.10 per share of UTi, which represents about 50-per cent premium to the stock's closing price on 8 October.
This is DSV's second attempt to acquire UTi in the past one year. Negotiations between the two sent the UTi stock as high as $14.75 in December. Since then, the shares have fallen significantly as the company has been struggling with profitability.
Further to the news, shares in UTi surged 51 per cent to close at $7.13 yesterday on Nasdaq, while DSV stock went up 7 per cent to close at 278 Krone in Copenhagen.
California-based UTi is a global supply chain and logistics services company with operations in 58 countries and 21,000 employees. For the year ended July 2015, the company reported revenue of $3.9 billion. It has a strong position in North America and a leading presence in South Africa.
UTi has been reporting losses in the last several quarters as it suffered from competition from rivals and fall in revenue. In the July quarter, the loss was $70 million, over three times compared to a year ago quarter. Revenue dropped over 16 per cent to $914 million.
DSV chairman Kurt Larsen said in a statement, "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.''
''We are operating in an industry where increasingly scale is critical. 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,'' Roger MacFarlane, UTi chairman commented.
''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," he added.
Pro forma 2014 revenue amounts to approximately $13 billion (75 billion Danish Krone) and the combined workforce will grow to 44,000 people in 84 countries, 848 offices and 339 logistics facilities. DSV said.
The combined companies will have a geographical footprint with approximately 61 per cent of revenue in Europe, Middle East and North Africa, 17 per cent in Americas, 16 per cent in Asia and 6 per cent in Sub-Saharan Africa.
The deal, approved by the boards of both the companies, is expected to close in the first quarter of 2016, subject to UTi shareholders' approval and necessary regulatory clearances.
P2 Capital Partners, UTi's largest shareholder with about 10.8-per cent stake, has already come out to support of the deal.
In July, US-based UPS agreed to buy rival Coyote Logistics for $1.8 billion. (See: UPS acquired Coyote Logistics for $1.8 bn)
FedEx, the US-based parcels delivery giant, struck a $4.8-billion deal in April to acquire Dutch rival TNT express. (FedEx to buy Dutch rival TNT Express for $4.8 bn).