Tuesday, April 27, 2021

Another Massive Takeover Deal for European Freight Forwarding and Logistics Group

New Conglomerate Likely to Be in World Top Three
Shipping News Feature

DENMARK – KUWAIT – Just two years after the acquisition of Swiss-based Panalpina, Danish transport and logistics company DSV has once again announced another huge takeover, Agility's stand-alone Global Integrated Logistics (GIL) business. The combination is expected to create a top-three global freight forwarder based on revenues.

The acquisition will be an all-share transaction and closing is expected in the third quarter of 2021. Agility will become the second largest shareholder in DSV with an approximate 8% stake in the combined company. We have written before about DSV’s acquisition policy, something which has seemingly served them well. We also hinted last year that the sale of their Danish headquarters might serve to finance future purchases.

The value of the GIL acquisition is US$4.2 billion (DKK 26 billion). Global Integrated Logistics is part of Agility and one of the world’s top freight forwarding and contract logistics providers (3PL). In 2020, the company had US$4 billion in revenue, mainly related to air & sea freight, and a workforce of approximately 17,000 employees. DSV recently completed the integration of the company’s largest acquisition to date, that Swiss Panalpina group purchase..

Of course all these big boys have skeletons in their closets. In 2018 Agility was fined €2.66 million as part of an air freight cartel (mind you Panalpina was hit for €23.65 million in the same case). In 2017 Agility finally settled its prosecution by the US government for allegations of overcharging the US military for supplies between 2003 - 07, a bill certainly exceeding $95 million.

With the acquisition of GIL, DSV Panalpina will become the world’s 3rd largest transport and logistics company with a combined pro forma revenue of approximately DKK 142 billion (around US$22 billion), an increase of around 23%, and a combined workforce of more than 70,000 employees, though doubtless there will be some trimming of staff at some point.

The Air & Sea-division, the largest division of DSV Panalpina, will be substantially strengthened with the acquisition of GIL and will consolidate its rank among the largest providers globally with close to 2.8 million containers (TEUs) and more than 1.6 million tonnes of air freight transported annually.

The contract logistics capabilities, which are increasingly important due to complex supply chains and changing distribution channels, will strengthen DSV’s Solutions division with GIL’s additional warehousing capacity of more than 1.4 million square metres, mainly in APAC and the Middle East. Furthermore, GIL will add road freight activities to DSV’s network in both Europe and the Middle East and thereby increase DSV’s competitiveness across all three divisions.

DSV Panalpina and GIL expect to close the transaction in Q3 2021 provided conditions are met and necessary approvals are obtained. Until then, DSV Panalpina and GIL will continue to operate separately and independently. Tarek Sultan, Agility’s Vice-Chairman, said:

“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, Shipa group of companies, and technology ventures. Agility will remain an emerging markets leader, investor in emerging technologies, and champion of sustainable business.”

Not part of the deal is Agility’s Logistics Parks business that develops warehousing and light-industrial infrastructure, and its portfolio of subsidiary companies, covering fuel logistics, commercial real estate, airport services, customs digitisation, and digital logistics, among others. Agility says that it will continue to invest in emerging technologies and companies and remains committed to sustainability across its operations and the companies it invests in.