DSV plans to acquire Panalpina in $4.6bn Europe logistics deal

Bloomberg

DSV A/S agreed to acquire Swiss rival Panalpina Welttransport Holding AG in a deal worth $4.6 billion that will create one of the world’s largest companies in logistics and freight forwarding.
The board of directors of Panalpina recommended shareholders accept the mostly stock offer worth 196 Swiss francs a share, the companies said in a statement on Monday, confirming a Bloomberg report.
The price represents a 43 percent premium from January 15, the day before DSV’s initial proposal, and the agreement has the backing of investors holding 69.9 percent of registered shares including the Ernst Goehner Foundation, which owns 46 percent of Panalpina and had rebuffed a previous offer.
DSV is paying a “hefty” price, Zuercher Kantonalbank analyst Marco Strittmatter, who has a market perform recommendation on the Swiss logistics company, wrote in a note.
DSV has grown into the world’s fifth-largest freight forwarder through a series of acquisitions over the past decades. In combining with Panalpina, DSV will become the world’s third- or fourth-largest freight-forwarder and the No. 2 in air freight, DSV Chief Executive Officer Jens Bjorn Andersen said in a telephone interview.
The deal ends months of speculation about the future of Panalpina, which in mid-February announced talks with Agility for a logistics tie-up in an effort to avoid being taken over by DSV. Minority shareholders, including Cevian Capital and Artisan Partners, went public with comments in favor of a DSV takeover, adding pressure on Panalpina’s management and the foundation. Both investors back the offer, the companies said.
“We welcome the agreement between Panalpina and DSV,” Lars Forberg, managing partner at Cevian Capital, said.
Event-driven brokers Olivetree Financial said the process highlighted the difficulties in working with Panalpina top shareholder Ernst Goehner Foundation. DSV made a first unsolicited offer worth 17O Swiss francs a share before sweetening the bid to 180 Swiss francs per share, valuing the target at about 4.3 billion Swiss francs. After the deal, the Ernst Goehner Foundation will become DSV’s top holder.
The takeover comes months after DSV walked away from another Swiss target, Ceva Logistics AG, after its offer worth $1.7 billion was rejected. DSV said at the time it would pursue other targets. Panalpina will help boost its air-cargo volumes and ocean-going containers operations, complementing the Danish group’s strength in road shipments.
The global freight-forwarding industry is coming under increasing pressure amid trade tensions between the US and China. Leading players in the highly fragmented sector are also targeting bigger deals to tap new markets and add cutting edge processing systems to safeguard them from disruptive technology.
The combination with Panalpina is expected to increase DSV’s annual sales by close to 50 percent, and the new entity will have pro-forma revenue of about $17.8 billion and a workforce of more than 60,000 employees. Following completion of the transaction, DSV will propose changing the name of the combined entity to DSV Panalpina A/S.