DSV to acquire Panalpina for $4.6 bn; strengthens European logistics sector

Apr 01, 2019: Danish logistics company DSV has agreed to buy Swiss rival Panalpina in a deal worth $4.6 billion, creating a leading global transport and logistics company with significant growth opportunities and potential for value creation. Following completion, DSV will propose to its shareholders, to change its name to 'DSV Panalpina A/S', which reflects the long, rich history of both the companies.

The deal ends months after the speculation about Panalpina's talks with Agility on strategic opportunities with regard to their respective logistics businesses. On the other hand, Panalpina minority shareholders, including Cevian Capital AB and Artisan Partners went public with comments in favour of a DSV takeover, adding pressure on Panalpina's management and the foundation. On April 1, both investors backed the offer, the companies stated.

Peter Ulber, chairman of the board of Panalpina, commented, "The board of director's assessment is that the updated proposal of DSV is very attractive. It is recognising the quality of Panalpina's employees, the company's strong position as one of the world's leading providers of supply chain solutions, and its special competencies and know-how in air and ocean freight. The board of directors recommends Panalpina's shareholders to accept the offer. Our customers will be able to benefit from a stronger network and service offering as well as new competencies and skills. Talks with Agility have been discontinued."

DSV has a long and successful track record of partnering with companies, and the combined business will be exceptionally well positioned for future growth.

Kurt Larsen, chairman of the board of DSV, added, "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. It's a great match on all parameters. Panalpina is a great company and we're very excited by this possibility to join forces and to welcome Panalpina's talented staff."

In January, DSV made an initial 17O Swiss franc stock-and-cash offer for Panalpina, before sweetening its initial bid to an all-cash 180 Swiss francs per share a month later. The approach to Panalpina comes just months after CEVA Logistics in October 2018, rejected DSV's $1.55 billion proposals and subsequently deepened ties with French shipper CMA CGM.

DSV's largest shareholder will be Ernst Göhner Foundation, which currently holds Panalpina's 46percent stake. Thomas A. Gutzwiller, the member of the board of trustees and chairman of the independent Panalpina Committee of Ernst Göhner Foundation, said, "In view of the ongoing industry consolidation and resulting opportunities and risks, we have carefully considered various options for Panalpina with an open mind. Our trustees unanimously concluded that the proposed combination under the umbrella of DSV provides the best opportunities for Panalpina to meet future market challenges from a position of strength and to create value for all stakeholders. As an entrepreneurial foundation with a philanthropic purpose, we feel very comfortable with the announced solution both in terms of quality and security as well as earnings potential. In this spirit of continuity, Ernst Göhner Foundation looks forward to supporting DSV Panalpina as the largest shareholder."

The combination with Panalpina is expected to increase DSV's annual revenue by close to 50 percent, which will rank the combined companies in the industry top four with a proforma revenue of approximately DKK 118 billion and a combined workforce of more than 60,000 employees. The combined company will have own operations in more than 90 countries.

At the same time, the air & sea division will be substantially strengthened and will be among the largest providers globally with close to 3 million containers (TEU's) and more than 1.5 million tonnes of air freight transported yearly. Contract logistics capabilities are increasingly important due to complex supply chains and changing distribution channels. The solutions division will be strengthened and Panalpina will bring additional warehousing capacity of more than 500,000 square metres.