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DSV's bid to buy UTi for US$1.35bn is accepted
THE offer by Danish logistics group, DSV, to acquire US-based UTi Worldwide for US$1.35 billion, or $7.10 per share, has been accepted.
The proposed share price represents a 50 per cent premium to UTi's closing trading price on October 8.
According to Reuters, activist US law firms are suggesting that UTi sold too cheap. San Diego-based law firm Johnson and Weaver said it is investigating whether the deal represents adequate consideration, because one Wall Street analyst valued UTi's stock at $14 per share, reported Air Cargo World.
Additionally, law firm Weiss Law is investigating whether UTi's board acted to maximise shareholder value prior to entering into the agreement given that analysts had set a target price of $13 per UTi share. UTi's shares traded at $10.25, or 44 per cent above the offer price, as recently as June 24 this year.
DSV rejects this claim. DSV CFO Jens Lund said: "We paid a 50 per cent premium on the closing price the day before, and a premium of approximately 34 per cent compared to the 30-day, volume-weighted average closing price. Given the recent fall in share prices, this is not excessive."
The transaction has been unanimously approved by both UTi and DSV's boards of directors, but not yet by UTi shareholders.
For the fiscal year ended January 31, 2014, UTi reported a net loss of $78.1 million, and in its most recent full fiscal year the loss widened to $202.6 million. DSV, on the other hand, has a long record of profitability and reported net income of $229 million in its most recent fiscal year.
UTi has 21,000 employees in 58 countries, and if the deal is approved, the new combined DSV/UTi workforce will number 44,000 people in 84 countries. This acquisition is expected to increase DSV's annual revenue by 50 per cent.
A combined DSV/UTi would become the fourth-largest global third-party logistics (3PL) company after DHL, Kuehne + Nagel and DB Schenker, in terms of revenue, with annual revenue estimated at $12.9 billion, and the seventh-largest air freight forwarder, with a projected 600,000 tonnes of cargo transported.
The transaction is pending approval of relevant regulatory agencies, with an expected closing date sometime in the first quarter of 2016.
The proposed share price represents a 50 per cent premium to UTi's closing trading price on October 8.
According to Reuters, activist US law firms are suggesting that UTi sold too cheap. San Diego-based law firm Johnson and Weaver said it is investigating whether the deal represents adequate consideration, because one Wall Street analyst valued UTi's stock at $14 per share, reported Air Cargo World.
Additionally, law firm Weiss Law is investigating whether UTi's board acted to maximise shareholder value prior to entering into the agreement given that analysts had set a target price of $13 per UTi share. UTi's shares traded at $10.25, or 44 per cent above the offer price, as recently as June 24 this year.
DSV rejects this claim. DSV CFO Jens Lund said: "We paid a 50 per cent premium on the closing price the day before, and a premium of approximately 34 per cent compared to the 30-day, volume-weighted average closing price. Given the recent fall in share prices, this is not excessive."
The transaction has been unanimously approved by both UTi and DSV's boards of directors, but not yet by UTi shareholders.
For the fiscal year ended January 31, 2014, UTi reported a net loss of $78.1 million, and in its most recent full fiscal year the loss widened to $202.6 million. DSV, on the other hand, has a long record of profitability and reported net income of $229 million in its most recent fiscal year.
UTi has 21,000 employees in 58 countries, and if the deal is approved, the new combined DSV/UTi workforce will number 44,000 people in 84 countries. This acquisition is expected to increase DSV's annual revenue by 50 per cent.
A combined DSV/UTi would become the fourth-largest global third-party logistics (3PL) company after DHL, Kuehne + Nagel and DB Schenker, in terms of revenue, with annual revenue estimated at $12.9 billion, and the seventh-largest air freight forwarder, with a projected 600,000 tonnes of cargo transported.
The transaction is pending approval of relevant regulatory agencies, with an expected closing date sometime in the first quarter of 2016.
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