DSV Panalpina buys Agility unit for $4bn

July 2021 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

July 2021 Issue

Logistics company DSV Panalpina has entered a definitive agreement to acquire Agility Public Warehousing Co’s Global Integrated Logistics business in all-share transaction that values Agility at $4.2bn.

The acquisition will make DSV Panalpina the third-largest logistics and transport company in the world, surpassing DB Schenker, putting it behind only DHL Logistics and Kuehne & Nagel as measured by revenue and freight volumes.

Under the terms of the deal, DSV will transfer 19.3 million new shares worth 1 Danish crown each to Agility, representing around 8 percent of its shares, making the Kuwait company the second largest shareholder in DSV. DSV expects the Agility unit to be fully integrated around a year after the transaction closes, which is expected to be in Q3 2021.

The combined company will have pro forma revenue of approximately $22bn and a workforce of more than 70,000 employees. The deal is expected to be accretive to earnings in year two. The company plans to provide more detail on synergies and integration costs following the close of the transaction.

Kuwait-based Agility has volumes of 740,000 ocean twenty-foot equivalent unit (TEUs) and 415,000 metric tons of airfreight, according to the latest data from Armstrong & Associates. DSV has around 600,000 for ocean and 300,000 for air. Combined, the two forwarders expect volumes totalling 2.8 million TEUs and 1.6 million metric tons of air cargo.

“Agility’s Global Integrated Logistics business and DSV are an excellent match, and we are proud that we can announce our agreement to unite,” said Jens Bjørn Andersen, group chief executive of DSV. “The combination of our two global networks will provide us with the opportunity to offer our customers an even higher service level. GIL’s global network, industry competencies and strong market position in APAC and the Middle East complement DSV’s network well and will support our long-term value creation ambitions. Our two groups of companies already share a culture of entrepreneurship and local ownership, and we look forward to welcoming GIL’s talented staff to DSV.”

“This deal creates significant shareholder value and marks a new milestone in Agility’s journey,” said Tarek Sultan, vice chairman of Agility. “Agility remains committed to the supply chain industry and will become the second largest shareholder in one of the fastest growing and most profitable logistics companies in the world. I want to thank GIL’s leadership and employees for profitably growing the company and steering it through one of the most challenging periods the industry has ever seen during the global pandemic. Agility is proud of what GIL has achieved.

“Agility will be exploring opportunities between DSV and its other businesses, with promising areas of future cooperation potentially including Agility’s Logistics Parks business, its Shipa group of companies and technology ventures,” he continued. “Agility will remain an emerging markets leader, investor in emerging technologies and champion of sustainable and responsible business.”

Agility’s Logistics Parks business, which develops warehousing and light-industrial infrastructure, and its portfolio of subsidiary companies, covering fuel logistics, commercial real estate, airport services, customs digitisation, and digital logistics, among others, will not be part of the deal. Agility will continue to invest in emerging technologies and companies and remains committed to sustainability across its operations and the companies it invests in.

DSV has a well-established track record of growing via dealmaking. The company acquired Swiss logistics group Panalpina for around $6bn two years ago.

Earlier this year, DSV reported that first-quarter revenue grew by 28 percent year-over-year on a constant-currency basis as air and ocean revenue climbed 46 percent. Operating income doubled, with “good performance in all business areas” being reported. The company also raised its full-year operating income forecast by 6 percent on the better-than-expected Q1 result.

Richard Summerfield