There had been whisperings throughout Q3 of this year about DSV’s business intentions. One of the five highest-ranking logistics companies globally with an unapologetic approach to business, it has openly stated that it favours takeovers worth $1bn (USD) and up. The company’s evolution reflects this statement, with growth coming predominantly from executing large-scale M&A. This September, DSV were assigned a BBB+ credit rating, reflecting their solid financial profile and leaving the logistics industry guessing. 

The company have long-promised another large-scale takeover. So, it was no real surprise when earlier this month the Board of Directors at CEVA Logistics AG, the global 3PL company, revealed that they had received an unsolicited proposal from DSV to acquire the company.

Although CEVA had initially declined to name the company involved, DSV A/S later confirmed their bid. DSV is already the parent corporation for a group of companies offering transport and logistics, and made an offer of CHF27.75 per share in CEVA Logistics, valuing the company’s equity at just over $1.5bn (USD). However, the bid was unanimously rejected after being viewed as low-value.

Acquiring CEVA would have significantly strengthened DSV’s contract logistics operations worldwide, as well as giving the company a valuable avenue to deploy capital. DSV acquired California-based UTi Worldwide Inc back in January 2016 after the company had been trading at a net loss. It didn’t take long for the buyout to pay off, with DSV reporting record profits in the final Quarter of 2017, defying many financial projections and surprising even their own CEO. 

However, the offer made to this particular ‘fledgling’ company – CEVA only went public in May – was barely more than the rate during their stock market debut.

In a statement, CEVA explained:

‘The Board of Directors concluded the proposal significantly undervalued CEVA’s prospects as a standalone company, particularly as CEVA Logistics, together with CMA CGM as a strategic partner, has been exploring measures to enhance performance in order to unlock CEVA Logistics’ full potential.’

In response to the news, CEVA’s shares have risen, with their major shareholder CMA CGM backing the company’s rebuttal. 

CMA have also published their own strategic ambitions for CEVA as long-term partners with the company. This outline had apparently been discussed with CEVA’s board over the past few weeks. The ‘four-point plan’ includes generating new commercial opportunities through the companies’ long-term relationship, supporting CEVA’s reorganisation strategy, capitalising on business synergies (particularly in freight management), and reinforcing the company’s management and IT systems to secure quicker turnaround.

Continuing from this outline, CMA announced their support for the Board of Directors’ decision, before commenting on their own business considerations moving forward:

CMA CGM is considering an increase in its shareholding of CEVA with a view to providing the company with the required stability to achieve its transformation.’

CEVA have confirmed that they will amend the 24.99% shareholding limit placed on CMA CGM, originally due to run until 5th November this year, with a view to increase the company’s stake to 33% ‘with immediate effect’. This is under the condition that CGM would not launch a full takeover offer for at least six months.

Meanwhile, DSV has indicated it would be unlikely to make a follow-up offer.

‘Our proposal has been rejected by CEVA’s board, and DSV has no dialogue with CEVA regarding a voluntary public tender offer for the outstanding equity.’

Despite this initial rejection, it’s doubtful that this will be more than a momentary blip for DSV. Analysts have been predicting a $1bn+ takeover bid from the company since the first weeks of 2018, and earlier in the year, CEO Jens Bjørn Andersen had suggested that if there was significant competition in the buyer’s market for any one particular company, ‘…we’ll find another.’

As for CEVA’s future, there are a number of options still up in the air. There’s the initial, and quite likely option of CMA taking up the increase in shares to one-third of the company. Alternatively, CMA CGM could instigate a full takeover, although there is a real potential for upsetting stakeholders due to the cultural barriers between freight forwarders’ needs and carrier mentality – the two of which are seldom complimentary.

There certainly seems almost zero chance of DSV taking over CEVA Logistics. But, with CEVA’s share prices falling from its debut of CHF27.5 to just CHF18.45 before this shake-up news, the market whispers of a change in ownership have some weight behind them yet.

Sarah O’Connell, Senior Editor, FORWARDER magazine

There had been whisperings throughout Q3 of this year about DSV’s business intentions. One of the five highest-ranking logistics companies globally with an unapologetic approach to business, it has openly stated that it favours takeovers worth $1bn (USD) and up. The company’s evolution reflects this statement, with growth coming predominantly from executing large-scale M&A. This September, DSV were assigned a BBB+ credit rating, reflecting their solid financial profile and leaving the logistics industry guessing. 

The company have long-promised another large-scale takeover. So, it was no real surprise when earlier this month the Board of Directors at CEVA Logistics AG, the global 3PL company, revealed that they had received an unsolicited proposal from DSV to acquire the company.

Although CEVA had initially declined to name the company involved, DSV A/S later confirmed their bid. DSV is already the parent corporation for a group of companies offering transport and logistics, and made an offer of CHF27.75 per share in CEVA Logistics, valuing the company’s equity at just over $1.5bn (USD). However, the bid was unanimously rejected after being viewed as low-value.

Acquiring CEVA would have significantly strengthened DSV’s contract logistics operations worldwide, as well as giving the company a valuable avenue to deploy capital. DSV acquired California-based UTi Worldwide Inc back in January 2016 after the company had been trading at a net loss. It didn’t take long for the buyout to pay off, with DSV reporting record profits in the final Quarter of 2017, defying many financial projections and surprising even their own CEO. 

However, the offer made to this particular ‘fledgling’ company – CEVA only went public in May – was barely more than the rate during their stock market debut.

In a statement, CEVA explained:

‘The Board of Directors concluded the proposal significantly undervalued CEVA’s prospects as a standalone company, particularly as CEVA Logistics, together with CMA CGM as a strategic partner, has been exploring measures to enhance performance in order to unlock CEVA Logistics’ full potential.’

In response to the news, CEVA’s shares have risen, with their major shareholder CMA CGM backing the company’s rebuttal. 

CMA have also published their own strategic ambitions for CEVA as long-term partners with the company. This outline had apparently been discussed with CEVA’s board over the past few weeks. The ‘four-point plan’ includes generating new commercial opportunities through the companies’ long-term relationship, supporting CEVA’s reorganisation strategy, capitalising on business synergies (particularly in freight management), and reinforcing the company’s management and IT systems to secure quicker turnaround.

Continuing from this outline, CMA announced their support for the Board of Directors’ decision, before commenting on their own business considerations moving forward:

CMA CGM is considering an increase in its shareholding of CEVA with a view to providing the company with the required stability to achieve its transformation.’

CEVA have confirmed that they will amend the 24.99% shareholding limit placed on CMA CGM, originally due to run until 5th November this year, with a view to increase the company’s stake to 33% ‘with immediate effect’. This is under the condition that CGM would not launch a full takeover offer for at least six months.

Meanwhile, DSV has indicated it would be unlikely to make a follow-up offer.

‘Our proposal has been rejected by CEVA’s board, and DSV has no dialogue with CEVA regarding a voluntary public tender offer for the outstanding equity.’

Despite this initial rejection, it’s doubtful that this will be more than a momentary blip for DSV. Analysts have been predicting a $1bn+ takeover bid from the company since the first weeks of 2018, and earlier in the year, CEO Jens Bjørn Andersen had suggested that if there was significant competition in the buyer’s market for any one particular company, ‘…we’ll find another.’

As for CEVA’s future, there are a number of options still up in the air. There’s the initial, and quite likely option of CMA taking up the increase in shares to one-third of the company. Alternatively, CMA CGM could instigate a full takeover, although there is a real potential for upsetting stakeholders due to the cultural barriers between freight forwarders’ needs and carrier mentality – the two of which are seldom complimentary.

There certainly seems almost zero chance of DSV taking over CEVA Logistics. But, with CEVA’s share prices falling from its debut of CHF27.5 to just CHF18.45 before this shake-up news, the market whispers of a change in ownership have some weight behind them yet.

Sarah O’Connell, Senior Editor, FORWARDER magazine