Kuwait-based Agility expects to complete the sale of its Global Integrated Logistics business to Danish transport and logistics company DSV Panalpina on Monday in an all-share deal with an enterprise value of $4.77 billion.
The deal gives Agility, one of the largest logistics firms in the Middle East and North Africa, 19.3 million shares in DSV once the transaction is completed in all jurisdictions.
It will make Agility the second-biggest shareholder in the Danish company, representing 8 per cent of all post-deal shares in DSV, Agility said in a statement on Monday.
“This deal affirms Agility’s global strategy and execution, and positions us for a new era of growth,” Tarek Sultan, Agility' vice chairman and chief executive, said. "We’re moving forward with a strategic investment in DSV, one of the world’s best-performing logistics providers. We will accelerate growth in the businesses we continue to operate, which historically account for around 80 per cent of our EBIT [earnings before interest and taxes]."
The global logistics sector is recovering from the devastating impact of the Covid-19 pandemic, which disrupted trade flows and supply chains globally.
With governments around the world beginning to relax Covid-19 related restrictions and forecasts for the global economy being revised upwards, the logistics industry's outlook is expected to improve.
Last month, the International Monetary Fund raised its global trade growth forecast to 9.7 per cent this year and 7 per cent in 2022 after it shrunk by 8.3 per cent in 2020.
Regulatory clearances on the deal are pending in a limited number of jurisdictions, which are "not material in the context of the overall size of the transaction", according to the company statement.
With its stake in DSV, Agility will also get a seat on the DSV board of directors.
The acquisition of Agility's GIL makes DSV the world's third largest freight forwarding company, with an expected combined revenue of roughly $26bn and 75,000 employees worldwide, according to the statement.
"There are many similarities when you look at our two companies both in terms of the business models and services ... DSV and GIL simply constitute an excellent match," Jens Bjørn Andersen, group chief executive of DSV Panalpina, said. "We will now start the integration, and together, we are going to grow the business and bring even more value to our many customers, partners and shareholders than we do separately.”
Mr Sultan said Agility’s next phase of growth will create additional shareholder value.
"We will continue investing in businesses that are driving sustainable innovation in supply chain and transportation," he said.
"Our future will be built around businesses, technology and investment that expand access to global trade and make supply chains faster, smarter, greener, fairer and more efficient and resilient.”
Agility reported a 503.7 per cent surge in net profit in the second quarter of 2021, amid a broader recovery in the regional and global economies. Net profit for the three months ending June 30 grew to 38.6m Kuwaiti dinars ($128.2m), up from 6.4m dinars in the same period last year. Revenue rose 26.6 per cent to reach 112.2m dinars ($373m).
In the second quarter, GIL's revenue rose 33 per cent due to “favourable market conditions” in freight forwarding and growth in contract logistics, Agility said.
Source: The National News