The sale of Long Beach Calif.-based non asset-based third-party logistics (3PL) services provider UTi Worldwide to Denmark-based global 3PL DSV for $1.35 billion and $7.10 per share is now official, UTi and DSV officials said today. This follows an October announcement from UTi in which it said it had entered into a definitive agreement to be acquired by DSV.
The sale of Long Beach Calif.-based non asset-based third-party logistics (3PL) services provider UTi Worldwide to Denmark-based global 3PL DSV for $1.35 billion and $7.10 per share is now official, UTi and DSV officials said today.
This follows an October announcement from UTi in which it said it had entered into a definitive agreement to be acquired by DSV.
UTi provides various services, including air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics, and truckload brokerage, among others. It has 310 offices and 230 logistics centers in 50 countries. DSV is a global supplier of transportation and logistics services, including global air and ocean freight, European road freight, and contract logistics.
“We are proud to welcome customers and employees of UTi to DSV,” said Jens Bjørn Andersen, CEO of DSV, in a statement. “I have no doubt that the combination of DSV and UTi is a recipe for success; and with our united network, we will create exciting opportunities for both customers and employees. We will now start the integration process while taking care to maintain a high service level towards all customers. The commercial activities of DSV and UTi will continue under the DSV brand as we move forward.”
While the deal is now official, getting to that point was not a lock, at least at first. In December 2014, UTIW issued a statement in which it shot down speculation that it would be acquired by DSV. UTi’s statement was issued in response to a Bloomberg report published on December 3, 2014. The report indicated that UTi was in “advanced talks to sell itself to DSV A/S” and has been in sale discussions since mid-2014 and was possibly reaching an agreement as soon as this month, according to people whom declined to be identified, the report said. And the report added that with a key focus on its services as a non-asset-based freight forwarder, including customs brokerage and warehousing services.
DSV said that this acquisition makes it the fourth-largest global freight forwarder, adding 50 percent to its existing revenue, coupled with a more diversified geography and business mix, including: more than 40,000 employees; operations in more than 80 countries; more than 1,000 offices and logistics facilities; and 4.7 square-meters of warehousing space.
It also noted that with UTi in the fold DSV is now the sixth largest ocean and seventh largest air freight operator, in addition to bringing increased global scale to its contact logistics division, solutions, and expanding its road freight and distribution center activities in Europe, North America, Africa, and Asia. And UTi will also bring added skills in various industry verticals, including automotive, healthcare, consumer and retail, chemicals, and energy, among others.
UTi has seen revenues dip in recent years, with the Wall Street Journal reporting last October that its fiscal second quarter earnings drove shares to their lowest levels in nearly ten years. The December 2014 Bloomberg report said that UTi had lost about one-quarter of its market value since disclosing on Feb. 25, 2014 that it had breached some loan covenants. It added that the company issued new debt, as well as convertible preferred shares to P2 Capital to fix the liquidity crunch, with now P2 UTi’s biggest investor.
“This deal definitely makes sense for both companies,” said Dick Armstrong, chairman of supply chain consultancy Armstrong & Associates. “DSV has been successfully aggressive over the years, and UTi has had a mixed bag in doing some things very well, including domestic transportation management, dedicated contract carriage on the West Coast, and TMS. DSV is a great buyer for UTi, with this deal bringing a lot of potential together, and it comes at what looks like a reasonable price while helping DSV to really round out its portfolio.”