DSV Panalpina A/S (“DSV”) has today signed an agreement to acquire Agility’s Global Integrated Logistics business (“GIL”), which is the global logistics division of Agility Public Warehousing Company K.S.C.P. (“Agility”). In 2020, GIL had USD 4.0 billion in revenue, of which approximately 80% is related to Air & Ocean freight, and approximately 17,000 employees. The acquisition will be an all-share transaction and closing is expected in the third quarter of 2021.
DSV and Agility have reached an agreement that DSV will acquire GIL in an all-share transaction by issuing 19,304,348 shares of 1 DKK/share to Agility, representing approximately 8% of all post-transaction outstanding shares of DSV. This will make Agility the second largest shareholder based on today’s shareholder register.
Based on the DSV share closing price of DKK 1,299.5 and an exchange rate of DKK 1.00 = USD 0.163 as of 26 April 2021, the all-share transaction has an implied equity value of GIL of USD 4.1 billion.
The combination of DSV and GIL will fortify DSV’s position as a leading global transport and logistics company with a combined pro forma revenue of approximately DKK 142 billion and a combined workforce of more than 70,000 employees.
Jens Bjørn Andersen, Group CEO of DSV, comments:“Agility’s Global Integrated Logistics business and DSV are an excellent match, and we are proud that we can announce our agreement to unite. The combination of our two global networks will provide us with the opportunity to offer our customers an even higher service level. GIL’s 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. Our two groups of companies already share a culture of entrepreneurship and local ownership, and we look forward to welcoming GIL’s talented staff to DSV.”
Tarek Sultan, Vice-Chairman, Agility, comments:”This deal creates significant shareholder value and marks a new milestone in Agility’s journey. Agility remains committed to the supply chain industry and will become the second largest shareholder in one of the fastest growing and most profitable logistics companies in the world. I want to thank GIL’s leadership and employees for profitably growing the company and steering it through one of the most challenging periods the industry has ever seen during the global pandemic. Agility is proud of what GIL has achieved.
Agility will be exploring opportunities between DSV and its other businesses, with promising areas of future cooperation potentially including Agility’s Logistics Parks business, its Shipa group of companies and technology ventures. Agility will remain an emerging markets leader, investor in emerging technologies and champion of sustainable and responsible business.”
Transaction overview• At completion, DSV will acquire 100% of GIL in consideration for issuing 19,304,348 new shares of 1 DKK/share to Agility. This will represent approximately 8% of all post-transaction outstanding shares of DSV. The share issue will be according to existing authorisations given to DSV’s Board of Directors.
• Enterprise value of approximately USD 4.2 billion and equity value of USD 4.1 billion.
• Transaction multiple: 23.2x EV/LTM adj. EBIT multiple and 0.94x EV/LTM sales. (Last twelve months: 1 April 2020 – 31 March 2021).
• The transaction is subject to regulatory approvals and approval by Agility’s shareholders (simple majority required).
• After completion of the transaction, DSV has agreed to nominate an Agility designee to DSV’s Board of Directors.
• Completion of the transaction is expected in the third quarter of 2021.
Strategic rationaleAcquisitions are an integral part of DSV’s strategy, and DSV has a track record of successful integrations. The combination with GIL is expected to increase DSV’s annual revenue by approx. 23%, which will rank the combined company in the freight forwarding industry top three with a pro forma revenue of approximately USD 22 billion (DKK 142 billion) and a combined workforce of more than 70,000 employees. The combined company will have own operations in more than 90 countries.
Scale remains one of the key competitive advantages in freight forwarding with significant operational and commercial benefits.
The Air & Sea division will be strengthened and will further cement its position as one of the largest providers globally with more than 2.8 million containers (TEUs) and more than 1.6 million tonnes of air freight transported annually. GIL’s presence in the fast-growing emerging markets in APAC as well as Europe and Americas will be a strong addition to DSV’s existing network.
Contract logistics capabilities are increasingly important due to complex supply chains and changing distribution channels. GIL will bring additional warehousing capacity of more than 1.4 million square metres, mainly in APAC and the Middle East, and thereby significantly strengthen the Solutions division.
Finally, GIL will add Road Freight activities to DSV’s network in Europe and the Middle East.
DSV and GIL are a strong match with many potential synergies as a result of similarities in business models, services and strategies:
• Strong customer relationships and vertical expertise
• Commercial synergies and cross-selling opportunities from stronger network and service offerings, new competencies and skills
• Consolidation of operations, administration and logistics facilities
• Consolidation of IT infrastructure
• Strong focus on corporate responsibility and sustainability
The transaction is expected to be EPS accretive (diluted and adjusted) in year 2 after completion of the transaction, and it is DSV’s aspiration to lift the operating margin of the combined entity to DSV’s existing levels within the respective business areas.
Following completion of the transaction, further details on the impact of the acquisition will be communicated, including estimates and timing of synergies and integration costs as well as an update on the financial outlook for 2021.
Source: BOLLYINSIDE
