DP World acquisitions mark strategic development

DP World

DP World has been busy acquiring logistics businesses over the past few weeks.

On July 1, it announced that it had bought Syncreon, an LSP specialising in assembly logistics for the automotive and electronics sector. DP World said that the sum paid for Syncreon represented an enterprise value of $1.2bn, but other financial details were not released.

On July 8, Imperial, a South African based freight forwarder and warehousing company announced that its board had accepted an offer from DP World for the company with a valuation of ZAR1.2bn/$83m.

Both companies represent a significant diversification for DP World. Syncreon has long focussed on areas such as managing line-feed in large automotive assembly plants, both for vehicle manufacturers and larger component suppliers. It has also expanded into other sectors that also require complex picking and feed operations, such as electronics and healthcare. This is distinctly different to the predominantly port-based businesses that have characterised DP World’s portfolio so far.

Imperial is slightly different. Much smaller than Syncreon, it has a broad-based business across southern Africa, serving consumer and retail businesses as well as industrial and agricultural clients. It represents an investment in the future of the African economy. Sultan Ahmed Bin Sulayem, Group Chairman and CEO of DP World articulated this ambition stating “Imperial has a significant presence in Africa, a market where trade is expected to grow at more than 2x GDP driven by population growth, accelerated urbanisation and rising middle classes. Imperial’s business strongly complements DP World’s existing footprint in Africa and Europe and will allow us to deliver a fully integrated end-to-end solution to cargo owners across a wider market.”,

These two acquisitions are significant developments in DP World’s corporate strategy. Whilst Imperial represents a not entirely new geographical diversification, Syncreon demonstrates an interest in deepening DP World’s involvement in their clients’ supply chains far beyond container management and handling. The question is, can DP World successfully integrate these new acquisitions into the rest of its business. If it works, expect further acquisitions.

Source: Transport Intelligence, July 8, 2021

Author: Thomas Cullen