The idea that DSV was thinking about a further acquisition after it digested UTi was fairly clear. That it was a target as large as CEVA is a little surprising. What is also surprising is the swiftness with which its offer was rejected.
CMA CGM was key in rejecting the DSV offer. The Marseille based shipping commented that “CMA CGM has the strategic ambition to accelerate CEVA’s turnaround and create value for all stakeholders, as discussed within the Board of CEVA during the last few weeks”. It appears that it also has the intention of tightening its grip on the contract logistics and forwarding company. As part of its statement outlining its rejection of DSV’s offer, CEVA said that it had “agreed to modify the current stand-still agreement” which restrained CMA CGM from increasing its holding above 25% of the share capital, amending it so that “CMA CGM is allowed to increase its holding up to one third of the voting rights of CEVA Logistics with immediate effect.” Unless CMA CGM is taking a very tough negotiating position over the price for CEVA, this would seem to make any further attempt by DSV to buy CEVA very difficult.
There is logic in DSV buying CEVA. It would thrust the Danish company to near the top of the league table for contract logistics companies, rivalled only by the likes of XPO and DHL Supply Chain. Both CEVA and DSV have a strong presence in automotive logistics however, CEVA would offer the opportunity for a marked expansion in North America for DSV. CEVA also has interesting businesses in China and South East Asia. CEVA’s business is profitable and it would probably be easier to absorb that UTi.
Of course, it might be asked why DSV did not buy CEVA directly from its previous private-equity owners, bearing in mind the offer on Friday was similar to the initial float price on the Swiss stock exchange. It appears that DSV may have missed an opportunity. Looking at the movement of CEVA’s share price over the past few months, CEVA’s investors may have as well.
Source: Transport Intelligence, October 15, 2018
Author: Thomas Cullen
