DSV to acquire Panalpina in $4.6B deal
- Danish transportation and logistics company DSV will buy Swiss freight forwarder Panalpina in a deal valued at 30.5 billion Danish Krone ($4.6 billion). DSV will propose a name change to "DSV Panalpina."
- "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 [$17.76 billion] and a combined workforce of more than 60,000 employees," an announcement from the companies said.
- DSV said the acquisition positions the company to form a stronger network with greater expertise and service offerings, along with consolidated operations, logistics facilities and infrastructure. Kurt Larsen, Chairman of the Board of DSV, called the deal "a great match on all parameters."
Just as the ocean shipping industry underwent a wave of consolidation, freight forwarders may be on a similar path. The top 20 forwarders combined control just one-third of the total market, Reuters reported. The industry's fragmented nature makes it ripe for mergers and acquisitions as freight forwarders look to cut costs and gain market share.
"Scale remains one of the key competitive advantages in freight forwarding with significant operational and commercial benefits," DSV said.
Once the DSV-Panalpina deal goes through, the combined company will be the fourth largest freight forwarding company, according to rankings by Armstrong & Associates, which take into account revenue, ocean TEUs and air metric tons.
Top Global Freight Forwarders (2017)
|Ranking||Company||Gross Revenue (Millions of dollars)||Ocean (TEUs)||Air (Metric tons)|
|1 (tie)||Kuehne + Nagel||$22,574||4,355,000||1,570,000|
Source: Armstrong & Associates
Although DSV is the larger company by revenue, Panalpina has greater capacity in ocean and air freight volumes. DSV said its Air & Sea division will be "substantially strengthened" through the Panalpina purchase. The new company will be able to provide 3 million TEUs and 1.5 million tons of air freight. The added freight capacity will complement DSV's road network.
Panalpina will also enhance DSV's logistics distribution capabilities and add 500,000 square meters (5,381,955 square feet) of added warehouse capacity.
DSV has been on the acquisition trail for several years, looking to grow its global presence and network. It acquired DFDS Dan Transport Group in 2000 and J.H. Bachmann in 2005. With its acquisition of UTi Worldwide in 2016, DSV became the fifth largest freight forwarding company in the world. The company made a failed attempt to buy CEVA logistics, for which CMA CGM has launched a takeover bid.
DSV and Panalpina's announcement ends several months of speculation about the future of Panalpina. The Danish company originally made an offer in January and upped the bid a month later to $4.3 billion, but both offers were rejected. The Swiss company was also in talks with freight forwarder Agility, raising further questions about which companies would merge.
The final agreed-upon deal between DSV and Panalpina is valued at $4.6 billion. Peter Ulber, Chairman of the Board of Panalpina, said talks with Agility have ended.
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