Third-party logistics provider CJ Korea Express is considering purchasing Netherlands-based CEVA Logistics from private equity firm Apollo Global Management, according to a report from industry news outlet The Loadstar.
Third-party logistics provider CJ Korea Express is reportedly considering purchasing Netherlands-based CEVA Logistics from private equity firm Apollo Global Management, according to industry news outlet The Loadstar.
CJ Korea has said previously its goal is to become a top-five 3PL by 2020, and that the company is prepared to invest up to 5 trillion Koran won (U.S. $4.63 billion) on outside acquisitions.
According to an analysis by Armstrong & Associates conducted in 2015, CJ Korea ranked 30th among global forwarders by 2014 gross logistics revenues ($2.84 billion), while CEVA was ranked number seven with $7.86 billion in revenues.
CJ Korea Express bought Rokin Logistics of China for $400 million, and has since expanded its scope within the country as well as in Southeast Asia. However, the company failed to acquire APL Logistics despite being one of the final bidders last year as it was outbid by Kintetsu World Express, which paid $1.2 billion for the logistics arm of Neptune Orient Lines.
NOL, the parent company of ocean carrier APL, was sold later in the year to French ocean carrier CMA CGM.
CJ Korea also reportedly expressed interest in Korea’s Daewoo Logistics, but that deal never went anywhere either.
According an analysis by The Loadstar, acquiring CEVA would be a “game-changer” for the company, but although it has a vast “war chest for acquisitions, CJ Korea Express would arguably need to undertake a comprehensive recapitalization to acquire CEVA, particularly if the forwarder was valued in line with its peers.”
If CJ Korea can acquire CEVA for a “low-ball bid” between $2 billion and $2.5 billion, that “would make a lot of sense strategically, and would likely be aimed at replacing CEVA’s expensive debt with cheaper funding.”
Based on the valuations of top-10 3PLs Panalpina and Kuhene + Nagel, as well as recent other logistics deals, however, CEVA could attract a valuation of between $3.3 billion and $4.3 billion.
Another option would be for CJ Korea to purchase bits and pieces of the CEVA portfolio, in which case the company would most likely be interested in CEVA’s contract logistics unit, which contributes the majority of the forwarder’s cash flow.
Report: Korean 3PL eyeing CEVA acquisition?
