DSV has announced an all share voluntary public tender offer for all publicly held shares of Panalpina.
DSV and Panalpina have reached an agreement on the terms and conditions of a combination by way of a Public Exchange Offer to all Panalpina shareholders. The board of directors of Panalpina recommends that Panalpina shareholders accept the Public Exchange Offer. The Public Exchange Offer already has the support of shareholders representing 69.9% of the registered shares of Panalpina, who have irrevocably agreed to tender their shares into the Public Exchange Offer. This includes Panalpina’s largest shareholder, Ernst Göhner Foundation and Cevian and Artisan*.
Using the closing price of DSV prior to the date of this announcement, the Exchange Ratio represents a premium of approximately 43% to the on-exchange closing price of Panalpina shares on SIX of CHF 137 on 15 January 2019, the day before DSV’s initial proposal was published.
If the Exchange Offer is successful, DSV and Panalpina will become one of the world’s largest transport and logistics companies with a combined pro forma revenue of approximately DKK 118 billion and a combined workforce of more than 60,000 employees.
An integration committee comprising an equal number of Panalpina and DSV representatives will be established to oversee the integration process and ensure a fair treatment of all employees. A thorough evaluation will be carried out with the aim to maintain relevant functions and competences in Switzerland.
Peter Ulber, Chairman of the Board of Panalpina, comments:
“In the course of the past weeks, Panalpina’s board of directors and
management has been exploring different strategic initiatives and held
discussions with DSV about a potential combination. The board of
director’s assessment is that the updated proposal of DSV is very
attractive. It is recognizing 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. Talks with Agility have been
discontinued. We are now looking forward to join forces with DSV and
contribute to creating one of the world’s largest transport and
logistics companies. Our customers will be able to benefit from a
stronger network and service offering as well as new competencies and
skills.”
Kurt Larsen, Chairman of the Board of DSV, comments:
“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”.
Ernst Göhner Foundation to become DSVs largest shareholder
Ernst Göhner Foundation, Panalpina’s largest shareholder with a 46%
stake, has agreed with DSV to tender all of its shares in the Public
Exchange Offer pre-announced today.
At completion of the transaction Ernst Göhner Foundation is expected to become the largest shareholder of DSV with a holding of approximately 11% of the issued share capital. DSV has undertaken to nominate and recommend to its shareholders that a candidate proposed by Ernst Göhner Foundation will be elected to the board of directors of DSV A/S. Ernst Göhner Foundation has undertaken not to sell or dispose of its DSV shares for a period of 24 months following settlement of the Public Exchange Offer, save for limited participation in share buy-back programmes that may be undertaken by DSV in the future.
Thomas A. Gutzwiller, Member of the Board of Trustees and
Chairman of the independent Panalpina Committee of Ernst Göhner
Foundation, comments:
“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 Board of 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.”
Strategic rationale
Acquisitions are an integral part of DSV’s strategy, and DSV has a track record of successful integrations. The combination with Panalpina is expected to increase DSV’s annual revenue by close to 50%, which will rank the combined companies in the industry top four with a pro forma 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.
Scale remains one of the key competitive advantages in freight forwarding with significant operational and commercial benefits.
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.
DSV’s road network will be a strong addition to Panalpina’s existing service offering.
The combination will increase DSV’s exposure to APAC and the Americas thereby further balancing DSV’s geographical footprint.
DSV and Panalpina is a strong match with many potential synergies as a result of similarities in business models, services and strategies:
- Unique customer relationships and vertical expertise
- Operational excellence and efficiency ‘DNA’
- Commercial synergies and cross-selling opportunities from stronger network and service offerings, new competencies and skills
- Consolidation of operations, administration and logistics facilities
- Consolidation of IT infrastructure
It is the target for the transaction to be EPS accretive (diluted and adjusted) in year 2 after settlement of the Public Exchange Offer, and it is DSV’s aspiration to lift the operating margin of the combined entity towards DSV’s existing level.
Following settlement of the Public Exchange Offer, further details on the impact of the acquisition will be communicated. This will include estimates of synergies and integration costs as well as an update on the financial outlook and financial targets.
