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DSV Panalpina’s $4.2bn Acquisition of Agility GIL

By Lucy Chen (University of Melbourne), Alexander Bergmüller, Friedrich von Storch, Haozhe (James) Huang (IE Business School)

Photo: Bernd Dittrich (Unsplash)


Overview of the deal

Acquirer: DSV Panalpina

Target: Agility Global Integrated Logistics

Total Transaction Size: $4.2 billion

Announcement Date: 27th April 2021

Expected Close Date: Q3 2021

Danish transport and logistics company DSV Panalpina has announced its agreement to acquire Kuwait-based Agility’s stand-alone Global Integrated Logistics (GIL) business in an all-share transaction. Under the terms of the transaction, DSV will acquire 100% of GIL in consideration by issuing 19.3 million new shares of 1 Danish crown per share to Agility, representing approximately 8% of shares in DSV.

Having recently completed the integration of its largest acquisition, the Swiss Panalpina, the acquisition of GIL will make DSV the world’s third-largest freight forwarder based on estimated revenues of $22 billion. The deal will result in a combined workforce of more than 70,000 employees and operations in more than 90 countries. It is expected to offer added capacity and scale in the fragmented forwarding industry, boosting DSV’s standing as a leading global freight transportation and logistics provider. The complimentary global network of both companies and similarities in business models and strategies also provide the ability to generate significant synergies and leverage vast operational and commercial benefits.

DSV has been known for its acquisitive strategy and has demonstrated its ability to successfully integrate companies with similar models – most recently Panalpina in 2019 and UTi Worldwide in 2015. There are however integration risks expected with the acquisition of Agility’s logistics arm. Additionally, the freight transport market remains highly fragmented, with the acquisition to provide DSV with an extra 5% in global market share.

“GIL’s global network, industry competencies and strong market position in APAC and the Middle East complement DSV’s network well and support our long-term value creation ambitions” - Jens Bjørn Andersen, Group CEO (DSV Panalpina)

Company Details: (Acquirer - DSV Panalpina)

DSV Panalpina is a global transport and logistics services provider servicing companies of all sizes. It offers road, marine and air transport services, as well as warehousing, purchase order management and other logistic solutions. The company is organised into three divisions to support customers’ entire supply chain: Air & Sea, Road and Solutions (warehousing and logistics). In 2020, DSV Panalpina generated revenues of approximately $17.7 billion.

Founded in 1976, headquartered in Hedehusene, Denmark

CEO: Jens Bjørn Andersen

Number of employees: 56,000

Market Cap: 324.9B (as of 21/05/2021)

EV: 324.5B

LTM Revenue: 115.93B


LTM EV/Revenue: 2.81x


* Currency in DKK

Company Details: (Target - Agility)

Agility’s Global Integrated Logistics (GIL) business is the stand-alone global logistics unit of Agility Public Warehousing Company, one of the world’s top freight forwarding and contract logistics providers. GIL is a transport and logistics provider offering services across 100+ countries around the world, with a strong footprint in emerging markets. It offers a mix of integrated logistics services, including air, ocean and road freight forwarding services, contract logistics and specialised logistics capabilities. In 2020, GIL reported revenues of USD 4.0 billion and adjusted EBITDA of USD 257 million.

Founded in1979, headquartered in Sulaibiya, Kuwait

CEO: Tarek Sultan

Number of employees: 27,870

Market Cap: 2.08B (as of 21/05/2021)

EV: 2.17B

LTM Revenue: 1.62B


LTM EV/Revenue: 1.34x


* Currency in KWD

Projections and Assumptions

Short-term consequences

In an industry in which scale continues to be one of the crucial competitive advantages and, as a result, has seen a wave of mergers and acquisitions, DSV Panalpina aims to strengthen its position as a global transport and logistics leader with the acquisition of Agility GIL. The Danish company displayed remarkable growth in recent decades, propelled by a multitude of M&A deals including its $4.6bn acquisition of Panalpina in 2019, which already made it the fourth largest freight forwarding company worldwide before the acquisition of Agility’s logistics business. Post-transaction, DSV will gain an additional 5% of global market share, increase its sea freight volumes to more than 2.8 million containers (TEUs), and raise transported air freight to approximately 1.6 million tonnes annually. Moreover, the combination of the two freight forwarders is expected to boost DSV’s revenue by 23% to approximately $22 billion and grow the combined workforce to over 70,000. As a consequence, DSV will overtake DB Schenker to jump to the third spot globally in terms of revenue and freight volumes, only ranking behind DHL Supply Chain & Global Forwarding and Kuehne + Nagel.

With the deal, DSV can add to its network an additional 1.4 million square metres of warehousing capacity, mainly located in APAC and the Middle East, thereby substantially strengthening its contract logistics capabilities and Solutions division, which is becoming increasingly important due to more complex supply chains and evolving distribution channels. In addition, GIL brings road freight capabilities in both the Middle East and Europe.

Long-term Upsides

The global freight forwarding market is expected to expand at a CAGR of 5.2% between 2020-2024, supported by the resurgent global trade. Activity levels within the e-commerce segment and pharmaceuticals will continue to contribute to its growth.

80% of Agility’s GIL is related to Air & Sea freight, with operations of 771,000 TEUs and 372,000 tons of air freight transported annually. Scale is likely to bring the combined group better negotiation power with ocean carriers. Furthermore, having an integrated offering service from air and sea to the road to warehousing is appealing to shippers seeking one provider to handle a complex supply chain. This will also allow DSV to counter competition from Maersk, the largest container shipping company, which also offers forwarding services.

The deal is also about geographical expansion. The Asia Pacific region has consistently proven to be one of the most important drivers of global trade. The Asia Pacific and the Middle East accounted for over 50% of GIL’s revenue, with the combined group significantly strengthen its market position in the region, where a wave of M&A has happened in recent years. The second-largest freight forwarder, Kuehne + Nagel acquired China-based Apex International Corporation (air 750,000 tons, sea 190,000 TEUs) earlier this year. SF Group, the Chinese integrated logistics company also acquired a 52% stake in the sixth-largest freight forwarder (air 410,000 tons, sea 1.3 million TEUs), along with logistics and supply chain businesses for $3.95 billion this year. However, the top 20 global players only have an estimated market share of 30%-40% of the fragmented global freight forwarding market. The trend for the largest players to gain market share from a long tail of regional freight forwarders will likely prevail in coming years.

Risks and Uncertainties

The transaction is expected to close in Q3 2021 if all conditions are met and if the necessary approvals are obtained. Changes in governmental regulations are one of the frequent uncertainties that arise when acquiring a company in the Middle East. If, however, approved by regulatory authorities, this will be an important acquisition in the logistics sector and an important one for DSV Panalpina’s CEO Jens Bjørn Andersen.

Whilst there are clear synergies between both companies, the ability for DSV to fully integrate all of the target’s operations, services, IT and logistics facilities without any significant issues is still a risk. These issues could come from differences in company executives in implementing the acquisition or external factors such as the expected rate of economic recovery in both the Middle East and Europe.

Furthermore, the success of the acquisition also depends on the performance of the global economy, as well as the capacity for growth in internet and technology usage. The combined company is expected to operate in more than 90 countries, adding significant organizational, geopolitical and macroeconomic risks and uncertainties to the venture. This means that the consolidation and convergence of the industry, its suppliers and its customers are further aspects that need to be considered.

The $4.2bn acquisition needs to be justified by the potential synergies between the two companies. Empirically, most deals fail to generate the synergies that companies expect when they engage in the acquisition. Taking industry trends and the macroeconomic environment into account is essential to establish accurate expectations under current market conditions.

Lastly, it is essential to remember that competition in the logistics sector is heating up as companies seek greater economies of scale following the boom in e-commerce during the pandemic. Ultimately, fast-moving and powerful global competitors make this acquisition’s potential synergies seem weak, and thus, DSV will probably and eventually be forced that the new entity engages swiftly into capital-raising solutions to realistically secure its competitive position in the mid to long-term time horizon.

“Agility remains committed to the supply chain industry and will become the second-largest shareholder in one of the fastest-growing and most profitable logistics companies in the world.” - Tarek Sultan, Vice-Chairman and CEO (Agility)


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