Danish transport and logistics company DSV settled in August the previously announced public exchange offer for all publicly held shares of freight forwarding and logistics provider Panalpina. Combination of the two companies creates one of the world’s largest transport and logistics companies with pro forma revenue of approximately DKK118 billion.
DSV is among the top five global freight forwarders, with an estimated 2% market share. Together, the top five players have a market share of approximately 15% of the global freight forwarding market; the top 20 players have approximately 30% of the market.
Mergers and acquisitions have played a key role in DSV’s growth, starting with small trucking companies and freight forwarders in the 1980s. The freight forwarding and logistics market continues to be marked by consolidation, driven by acquisitions by well-capitalized companies seeking larger market share.
Excluding the impact of IFRS 16, the enterprise value of the DSV acquisition of Panalpina is approximately DKK35.1 ($5.2 billion). Including the IFRS impact, the enterprise value of the transaction is about DKK37 billion.
DSV expects to achieve annual cost synergies of approximately DKK2.2 billion. Cost synergies are expected to have a full-year effect by 2022 and primarily will be derived from consolidation of operations, logistics facilities, administration and IT infrastructure.
The transaction is expected to be EPS accretive (diluted and adjusted) by 2021. For full-year 2022, DSV expects the operating margin of the combined entity will be lifted toward the DSV Group’s current level. Long-term financial targets will be communicated during 2020.
