The DSV Group (“DSV”) today signed an agreement to acquire US based UTi Worldwide Inc. (“UTi”). UTi is a global, supply chain services and logistics company with revenue of USD 3.9 billion and 21,000 employees in 58 countries. The combined company will be one of the world’s strongest transport and logistics networks.
DSV today entered an agreement to acquire UTi at the price of USD 7.10 in cash per ordinary share. The total transaction implies an enterprise value of approximately USD 1.35 billion.
The per-share consideration represents a premium to the ordinary shareholders of approximately 50% compared to the closing price of UTi on 8 October 2015, and a premium of approximately 34% compared to the 30-day volume-weighted average closing price.
The Boards of Directors of DSV and UTi have unanimously approved the transaction.
Kurt K. Larsen, Chairman of the Board of DSV, comments:
“It is a great pleasure for me to announce the first step towards the combination of UTi and DSV. 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 look forward to joining forces and welcoming our new colleagues from UTi to DSV.”
Roger MacFarlane, Chairman of the Board of UTi, comments:
“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. 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.”
Transaction overview
Holders of ordinary shares of UTi will receive cash consideration of USD 7.10 per ordinary share upon closing of the acquisition by way of merger. Following the merger, UTi will become an indirect wholly-owned subsidiary of DSV.
- The total transaction implies an enterprise value of approximately USD 1.35 billion
- Transaction multiple: 0.34x last 12 months reported sales of USD 3.9 billion
- Offered cash price of USD 7.10 per ordinary share
- Danske Bank, ING and Nordea have committed to financing the transaction
- DSV will use equity financing, in the level of DKK 5 billion during the next twelve months, to maintain a prudent capital structure
- The transaction is conditional on obtaining the approval of the shareholders of UTi at an extraordinary shareholders’ meeting. UTi’s largest shareholders, funds controlled by P2 Capital Partners, LLC, holding approximately 10.8% of the ordinary shares and all of the convertible preference shares, have entered into an irrevocable voting undertaking in support of the transaction, subject to certain conditions. The transaction is also conditional on receipt of the relevant regulatory approvals and other customary closing conditions
- Closing is expected in Q1 2016
Strategic rationale
Acquisitions are an integral part of DSV’s growth strategy, and DSV has a strong track record of successful integration of acquired companies. Theacquisition of UTi is expected to increase DSV’s annual revenue by approximately 50%, creating one of the world’s strongest transport and logisticsnetworks.
Pro forma 2014 revenue amounts to approximately USD 13 billion (DKK 75 billion) and the combined workforce will grow to 44,000 people in 84 countries, 848 offices and 339 logistics facilities.
The Air & Sea Division will be significantly strengthened, and DSV will increase its industry specific capabilities across all divisions. Furthermore, DSV will now be truly global within contract logistics and expand into road freight activities outside Europe. This will enable the company to offer its customers a broader range of services.
The combined companies will have a more balanced geographical footprint 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.
DSV and UTi are a strong match with many potential synergies as a result of similarities in business models and services:
- Commercial synergies from stronger network and service offerings, new competencies and skills
- Consolidation of offices and logistics facilities
- Consolidation of IT infrastructure
- Optimisation of organisational setup
- Stronger buying power
The transaction is expected to be EPS accretive in year two after closing, and in the long term it is expected that operating margins of the combined entity can be lifted towards DSV’s existing levels within the respective business segments.
Following closing, further details on the impact of the acquisition will be communicated, including estimates of synergies and integration costs.
The content of this announcement will have no impact on the previously announced outlook for the financial year 2015 as reported in the Interim Financial Report H1 2015, dated 4 august 2015.
Source: DSV press release