The fast-growing Danish DSV Panalpina has agreed to buy the Kuwait-based logistics business from Agility for USD 4.1 billion as part of an all-share deal to serve the world’s third largest group by revenue among freight transport organizers to accomplish.
Agility will become the second largest shareholder in the combined company under the agreement, with an 8 percent stake in consideration for the Global Integrated Logistics business.
The shares of DSV rose 8 percent from trading at lunchtime in Copenhagen.
It is the latest example of dealmaking warming in the logistics industry as companies seek greater economies of scale after a boom in e-commerce during the pandemic.
DSV had grown to become the fourth largest freight forwarder organizing shipments for manufacturers through more than a dozen acquisitions in an industry critical to the global supply chain.
The latest acquisition is less than two years after Panalpina bought it for DKr 37 billion (USD 6 billion).
The combination with the logistics arm of Agility, which achieved sales of USD 4 billion last year and accounted for 30 percent of consolidated profit, will bring it to third place behind DHL Supply Chain & Global Forwarding and Kuehne + Nagel.
In February, the Swiss Kuehne + Nagel bought the Asian freight forwarder Apex for an undisclosed amount, and the Chinese SF Holding acquired a 51.8 percent stake in the Kerry Logistics Network in Hong Kong for USD 2.3 billion in order to acquire Asia’s leading logistics provider become.
“Deal activity in the freight forwarding sector is a frenzy of activity,” said Daniel Roeska, an analyst at Bernstein.
The transaction is financed by the issue of 19.3 million new DSV shares and values Agility’s logistics unit a multiple of 23.3 times earnings before interest and taxes over the past 12 months.
The company, which employed 17,000 people last year, had $ 129 million on sales of $ 4 billion. The acquisition will help strengthen DSV’s air and sea transportation capabilities, particularly in emerging markets.
The additional sales would increase DSV Panalpina’s sales by 23 percent to around USD 22 billion.
“The global network, the industry expertise and the strong market position of Global Integrated Logistics in Apac and the Middle East complement the DSV network well and will support our long-term value creation ambitions,” said Jens Bjorn Andersen, Managing Director of DSV.
The Hedehusene-based group doubled its operating profit year-over-year in the first quarter and improved its annual profit forecast due to high global freight rates due to strong demand and limited capacity.
Agility will maintain the logistics park business, the online freight platform and other subsidiaries such as fuel logistics and commercial real estate businesses.
“This deal is one of the largest private M&A deals to date in the Gulf Cooperation Council. We anticipate this transaction will have a positive impact on the company’s equity and market value, ”said Tarek Sultan, vice chairman of Agility.