CMA CGM outlined late on Friday it had agreed to buy a “stake of nearly 25% of CEVA Logistics AG (“CEVA”), a global leading player in the logistics sector.” When CEVA’s shares are floated on the Swiss stock exchange, “CMA CGM has committed to subscribe for mandatory convertible securities of CEVA in an estimated amount between 380 and 450 million CHF. These securities will be convertible into CEVA common shares subject to obtaining all required regulatory approvals”
CMA CGM will have two directors on the new board of CEVA and it has said that it will look to create joint services with the company. Rodolphe Saadé, Chairman and CEO of CMA CGM commented that “with this proposed investment in CEVA, CMA CGM makes a significant move, in line with its development strategy. CEVA is a major player in the logistics business, which is closely related to the shipping industry. Together, the two companies will also explore possible co-operations allowing us to propose an ever more differentiated and qualitative offering while integrating services beyond maritime transport”.
Such a statement implies that CMA CGM will be more than just a passive investor. It appears to be looking for some sort of strategic relationship, something that may have implications for CEVA’s container shipping forwarding business. However, the synergies between the rest of CEVA and CMA CGM are not immediately obvious.
The move also appears to preclude any takeover options by other suitors, such as Geodis or Chinese conglomerates which have been suggested in the past. Apollo and the other present investors will be relieved that there will be a floor under the share-price, although a number in the region of US$400m for a quarter of the company is not overly generous.
The big change is that CEVA will now have a strategic owner committed to its long-term development, as opposed to a financer constantly looking for an exit. What the result will be is unclear, however CMA CGM is being driven by a need to expand into markets more profitable than those of container shipping whilst remaining in the logistics sector, so an emphasis on profitable growth seems likely as opposed to grabbing for market share or overly ambitious acquisitions. That said, the Saadé family has never lacked for ambition.
Source: Transport Intelligence, April 23, 2018
Author: Thomas Cullen
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