Friday, January 22, 2016

Billion Dollar Freight and Logistics Takeover Approved by Antitrust Regulators

One Region Guarantees Supply Chain Jobs Cannot be Cut for Two Years
Shipping News Feature
DENMARK – US – SOUTH AFRICA – Shareholders of US based global supply chain services and solutions provider, UTi Worldwide have approved the proposal of a $1.35 billion acquisition by international freight and logistics group, DSV, which we covered in October last year. This week also saw the takeover receive formal antitrust clearance in South Africa. With the deal officially expected to close on January 22nd, the newly merged company is predicted to have a more balanced geographical footprint for the pair than formerly with approximately 61% of revenue in Europe, Middle East and North Africa, 17% in Americas, 16% in Asia (APAC) and 6% in Sub-Saharan Africa.

The South African antitrust approval was the final required regulatory approval necessary for the transaction. Upon completion, each ordinary share of UTi Worldwide will be converted into the right to receive a cash payment of $7.10, without interest. Following the merger, UTi will become an indirect, wholly-owned subsidiary of DSV.

During the investigation by the South African Competition Commission, investigators found that the proposed transaction raises a public interest concern in that it will result in the cutback of employees. In order to remedy this negative impact, the Commission has imposed a condition that the merging parties shall not reduce the number of any non-management employees for a period of two years from the implementation date as a result of the merger.

The combined operation will initially mean a worldwide staff level of around 40,000 employees with an annual revenue of $13 billion. The two companies shift about 1.5 million TEU per annum from well over 1,000 locations totalling over 2.5 square metres of warehouse space.