DSV to Buy Agility’s Logistics Unit for $4.1 Billion
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DSV Panalpina A/S agreed to buy Agility Public Warehousing Co.’s Global Integrated Logistics business for $4.1 billion, extending its reach in the air and sea transport industry.
The all-share transaction means DSV will issue just over 19 million shares to Agility, or about 8% of the Danish company’s total stock once the deal is completed. Kuwait-based Agility will become DSV’s second-largest owner. DSV shares jumped as much as 10%, the most in 13 months.
The integration of GIL may be completed by the end of 2022, Jens Bjorn Andersen, DSV’s chief executive, said in a phone interview. The purchase will raise DSV’s global market share in the fragmented freight-forwarding industry to 4-5%, he said.
“In other industries it’s normal to have much larger market share, so there is probably a lot of room left to make more acquisitions,” Andersen said.
DSV has used takeovers to propel its rapid expansion since the 1970s. The Agility deal means DSV will be the world’s third-largest freight forwarder behind Deutsche Post AG’s DHL and Kuehne + Nagel International AG, moving from the fourth spot.
With U.S. offices in Clark, N.J., DSV Panalpina ranks No. 14 on the Transport Topics Top 50 list of the largest logistics companies in North America.
Shares in DSV traded about 8% higher in Copenhagen, bringing gains so far this year to about 38%.
The purchase of the unit is the first major deal since DSV bought Switzerland’s Panalpina in 2019 for $5 billion. It finished integrating Panalpina late last year and has been looking for a new takeover target since.
GIL had about $4 billion in revenue last year, with a head count of roughly 17,000. The combined group will have about $22 billion in revenue and more than 70,000 employees, according to the April 27 statement.
“From a credit perspective we see the acquisition as positive as it will increase DSV’s scale and diversification,” Danske Bank analyst Brian Borsting said in a client note. He also pointed to DSV’s decision to opt for a construction that’s “100% equity financed, hence no increase in leverage.”
Borsting noted that DSV “has a very strong track record regarding integration.”
DSV announced the deal in connection with its first-quarter results, with revenue and profit beating analyst estimates in the period.
— With assistance from Adveith Nair and Fiona MacDonald.
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