Swiss freight forwarder CEVA Logistics announced January 28 that its Board of Directors has urged company shareholders not to sell their shares following a public tender offer from French shipping line CMA CGM, as their shares are worth a lot more than what is being offered.
In an emailed ad hoc announcement, CEVA said the board “does not recommend that shareholders tender shares, as valuation based on independent review of revised business plan indicates midpoint value significantly above offered price.”
CMA CGM on November 26, 2018 announced a public tender offer for all publicly held registered shares of CEVA Logistics with a nominal value of CHF0.10 each. On January 28, 2019, CMA CGM published its prospectus for the public tender offer on CEVA shares with an offer price of CHF30 per share.
The French liner at present owns a non-controlling 33% stake of the registered shares of CEVA Logistics.
CEVA said that based on a comprehensive review of its revised business plan for the period up to 2023 developed with external advisors and based on an independent financial opinion, the Board of Directors, except for two members, came to a unanimous conclusion not to recommend to CEVA’s shareholders to tender their shares into the offer.
“The valuation of the revised business plan indicates a midpoint value of CHF 40 per share, well above the share price of CHF 30 offered by CMA CGM,” it said.
“While the Board of Directors concluded that the offer price of CHF 30 per CEVA share is reasonable from a financial perspective and that the Offer provides a fair exit opportunity for shareholders who wish to receive cash for their CEVA shares, it makes its recommendation in the belief that shareholders could realize a higher value with their continuing investment,” the board added.
This, it continued, is due to the growth potential inherent in the CEVA business, the effects of the acquisition of the freight management business of CMA CGM, and the strategic partnership between CEVA and CMA CGM.
It said the key financial highlights of the business plan are:
- CEVA’s 2021 revenue target above US$9 billion, reflecting a 5% average annual organic growth as well as including the contribution of CMA CGM Logistics of US$630 million
- Stronger footprint in ocean freight management
- Expectations on adjusted EBITDA raised from US$380 million in 2017 to $470 million to $490 million in 2021
- Intensified business relationship with CMA CGM while keeping an arm’s length relationship.
“The Board of Directors, with the support of independent external advisors challenged the new business plan, has validated it and fully trusts CEVA’s management team in its capability to successfully execute the plan. For those reasons, management and the Board will not tender the shares and do not recommend shareholders to tender either,” said Rolf Watter, chairman of the Board of CEVA.
CEVA Logistics also rejected a $1.54 billion offer last year from Denmark’s DSV, which this month made a more than $4 billion bid for Switzerland’s Panalpina.