Danish logistics giant DSV has offered to buy Swiss logistics major Panalpina, quoting a price of 195.8 Swiss francs per share in a deal worth around $4.6 billion. This looks to be the final offer from DSV, after the two companies spent more than two months negotiating an agreeable takeover price.
The initial bid was a stock-and-cash offer of 170 Swiss francs per share in January, which was increased to an all-cash bid of 180 Swiss francs per share in February. That offer still failed to make an impact. If this newly framed deal goes through, the merged company would be the world’s fourth-largest freight forwarder in terms of revenue with an excess of $17 billion per year – behind only DHL, Kuehne & Nagel, and DB Schenker.
“A combination of DSV and Panalpina further strengthens our position as a leading global freight forwarding company. Together, we can present a strong global network and enhanced service offering to our clients, further solidifying our competitive edge in the industry,” said Kurt Larsen, chairman of the DSV board, in a statement. “It’s a great match on all parameters. Panalpina is a great company and we’re very excited by the possibility to join forces and to welcome Panalpina’s talented staff.”
The idea for the merger seems to be about consolidating DSV’s presence in the global logistics landscape. Freight forwarding across the world is extremely fragmented, with the top 20 logistics companies controlling only about one-third of the market. This merger may pave the way for other mergers; those would likely help expand the joint entity’s reach and thus increase revenue faster than when the companies operate separately.
“In the course of the past weeks, Panalpina’s board of directors and management have been exploring different strategic initiatives and held discussions with DSV about a potential combination. The board of directors’ assessment is that the updated proposal of DSV is very attractive. We are now looking forward to joining forces with DSV and contributing to creating one of the world’s largest transport and logistics companies,” said Peter Ulber, chairman of Panalpina’s board in his statement.
But the merger did not come about without a fight. Panalpina, while refusing DSV’s initial offer, had announced talks with Agility, another Swiss-based logistics major, for a logistics collaboration that would likely have ended DSV’s takeover offer. The Ernst Göhner Foundation (EGF), which owns 46 percent of Panalpina, had initially resisted the DSV merger and had gone against the wishes of the rest of Panalpina’s shareholders like Cevian Capital and Artisan Partners, which were favorable towards the consolidation.
“We welcome the agreement between Panalpina and DSV. We believe the combination has great industrial logic and will create one of the best companies in the logistics industry,” said Lars Forberg, co-founder of Cevian, in a statement.
Once the transaction is completed, Panalpina is expected to integrate within DSV in a timespan of two to three years, with EGF becoming DSV’s largest shareholder, owning nearly 11 percent of the company’s issued shares. DSV would have to elect one candidate from EGP to its board of directors. Under the conditions of the deal, EGF would not sell or dispose of its DSV shares for two years from the time of finalizing the settlement.
With the Panalpina-DSV merger, the consolidated company is expected to increase its annual sales by nearly 50 percent, with a workforce comprised of over 60,000 employees and a geographic presence in more than 90 countries. Earlier today, the shares of Panalpina rose after the merger’s confirmation, jumping by 16 percent to touch 192.40 Swiss francs.
