The Board of Directors of Panalpina has announced that it has received an unsolicited, non-binding proposal from DSV to acquire the company at a price of CHF 170 per share, comprising a mix of cash and DSV shares.
According to its fiduciary duties, the Board of Directors of Panalpina is reviewing the proposal in conjunction with its professional advisers.
DSV have stated:
"In response to Panalpina Welttransport Holding AG’s (“Panalpina”) announcement today, we can confirm that DSV has made an indicative and private proposal to Panalpina’s Board of Directors to acquire Panalpina. The consideration consists of 1.58 DSV shares and CHF 55 in cash for each Panalpina share. Based on closing prices as of 11 January 2019, the value of the offer is CHF 170 per share.
We have not yet received a response to our indicative and private proposal from Panalpina’s Board of Directors.
A combination of DSV and Panalpina would create a leading global transport and logistics company with significant growth opportunities and potential for value creation. A combination presents a unique opportunity for both companies and their respective stakeholders including shareholders, employees, customers and suppliers.
The indicative proposal will provide Panalpina’s shareholders with a premium of 24% to Panalpina’s closing share price of CHF 137.5 as of 11 January 2019 and 31% to the 60-day VWAP of CHF 129.5 as of 11 January 2019.
The combined business would generate expected revenues of more than DKK 110bn and EBITDA of more than DKK 7bn on a pro-forma 2018 basis (excluding any synergy benefits). The structure of our offer will allow Panalpina’s shareholders to participate in the benefits of the combination.
DSV has a long and successful track record of partnering with companies, and the combined business will be exceptionally well positioned for future growth."
This has triggered much excitement and a jump in Panalpina’s share price.
However, it should be not assumed that the purchase will definitely go ahead. Whilst the deal may have both strategic and investment logic to some, the Ernst Goehner Foundation has until now stubbornly disagreed. It owns over 40% of Panalpina and has never been attracted to the prospect of selling the company. Perhaps the new offer has been motivated by DSV’s perception that this has now changed and the ferocious criticism of the Foundation and Panalpina’s management by other shareholders has changed minds.
There is also gossip around the possibility of other bids for Panalpina. In particular, Kuehne + Nagel is rumoured to be interested in buying its Swiss rival. The price offered by DSV is the equivalent of $4.1bn and there are suggestions that this is not very generous to Panalpina shareholders, thus tempting other potential buyers and triggering a ‘bidding war’. DSV is a highly profitable company with strong credit lines however it also has a record of avoiding overpaying for its purchases. It may simply be elbowed out of the way by more extravagant rivals.
Yet if DSV succeeds in an acquisition of Panalpina it will continue the company’s transformation. Buying UTi a couple of years ago gave the company a presence in a string of emerging markets as well as the US, but Panalpina will not only catapult DSV into being one of the leading freight forwarders in the world but will also reduce its exposure to the European market to around 60% of sales according to DSV’s CEO Jens Bjorn Andersen in an interview with Reuters.