DSV to purchase Panalpina for US$4.6 billion in blockbuster deal

After weeks of speculation over the future of Panalpina’s ownership, Denmark’s DSV today reached an agreement to purchase its Swiss rival for US$4.6 billion – a merger that will create one of the world’s largest logistics companies, and appears to end the possibility of a merger with the Agility Group

The board of directors at Panalpina said it recommends its shareholders accept the Public Exchange Offer worth about $196 per share, or about 43 percent higher than Panalpina’s stock price as of Jan. 15 when the initial offer was made. According to Reuters, shares in DSV rose 2.5 percent in early trading this morning, while Panalpina shares jumped 15 percent.

“A combination of DSV and Panalpina further strengthens our position as a leading global freight forwarding company,” said Kurt Larsen, chairman of DSV’s board of directors. “Together, we can present a strong global network and enhanced service offering to our clients, further solidifying our competitive edge in the industry.”

DSV made an initial offer to purchase Panalpina in mid-January, for $170 per share, from a combination of cash and DSV shares adding up to about US$4 billion – but Panalpina’s largest shareholder, the Ernst Göhner Foundation, said it did not support a non-binding acquisition proposal from DSV.

In February, Panalpina’s board of directors confirmed reports that, like DSV, it too was flirting with the idea of acquiring a large forwarder – namely, of the Agility Group – but there has been no update on whether or not the deal was discussed any further. With today’s news that DSV will indeed be acquiring Panalpina, it would seem that the Panalpina – Agility merger is no longer on the table.

In a statement today, Panalpina’s board chairman, Peter Ulber, alluded to the company’s long-term negotiations. “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,” he said. “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.”

Prior to this agreement, DSV had been courting other forwarding outfits for months – in October, making a non-binding acquisition bid for CEVA Logistics AG, which was rejected, CEVA saying that the deal “significantly undervalues” it as a standalone company. DSV responded by upping the ante in a subsequent offer, but rescinded it before CEVA could respond.

If the merger is successful, DSV and Panalpina will have a combined pro forma revenue of about $17.7 billion and employ more than 60,000 people in 90 countries. DSV said it will propose the companies share the name “DSV Panalpina A/S,” and will move to begin consolidating operations, administration, logistics facilities and IT infrastructure.

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