Danish logistics service provider DSV Group is buying smaller competitor U.S.-based UTi Worldwide Inc. for US$1.35 billion in a move to boost DSV’s earnings and extend its reach outside Europe.
The acquisition of UTi, which has revenue of $3.9 billion and 21,000 employees in 58 countries, is expected to increase DSV’s annual revenue by about 50%, said DSV, the world´s sixth largest logistics company.
It will also provide DSV a more balanced geographical footprint with about 61% of revenue in Europe, Middle East and North Africa; 17% in the Americas; 16% in Asia; and 6% in Sub-Saharan Africa.
Kurt Larsen, chairman of the Board of DSV, said the merger will make the combined company stronger and enable it to capitalize on business synergies as well as a greater global reach.
He said that the merger will still have to be approved by the shareholders of UTi and by relevant regulatory bodies, and that they expect to close the deal in the first quarter of 2016.
Roger MacFarlane, chairman of the Board of UTi, meanwhile, said that “the Board of Directors of UTi has unanimously approved the agreement with DSV and strongly recommends that our shareholders accept the offer.”
“Pro forma 2014 revenue amounts to about $13 billion (DKK 75 billion) and the combined workforce will grow to 44,000 people in 84 countries, 848 offices and 339 logistics facilities,” said DSV.
Moreover, the air & sea division will be significantly strengthened, and DSV will increase its industry-specific capabilities across all divisions. Furthermore, DSV will go “truly global within contract logistics and expand into road freight activities outside Europe.”
Headquartered in California, UTi is a global supply chain service and logistics company with a strong presence in North America and South Africa as well as an extensive network in Asia-Pacific and Europe. In the 12 months ending July 31, 2015, its freight forwarding and contract logistics & distribution segments reported revenues of more than $2.5 billion and $1.4 billion, respectively, making the firm a global top 20 third party logistics provider.
Acquisitions are an integral part the growth strategy of DSV, which has previously made successful integration of acquired companies.
Industry players have been actively engaged in mergers and acquisitions in an effort to counter slow growth. U.S.- based FedEx is working to acquire Dutch parcel delivery service TNT Express after buying third-party logistics business GENCO earlier this year. On the other hand, United Parcel Service recently bought freight broker Coyote Logistics, while XPO Logistics has initiated a slew of recent acquisitions, including Con-way.
