DSV A/S agreed to buy UTI Worldwide Inc. (NASDAQ: UTIW) in a transaction that implies an enterprise value of $1.35 billion as the Danish logistics company seeks to expand in the U.S. air and sea freight market.
DSV’s offer of $7.1 a share represents a premium of about 50 percent compared to the Oct. 8 closing price of UTO’s stock, DSV said in a statement on Friday. The Danish company’s shares rose as much as 7.3 percent in Copenhagen after the announcement and traded up 5.8 percent at 266.40 kroner as of 10:06 a.m. local time.
“It’s a very interesting takeover with a good geographic match for DSV,” Jacob Pedersen, an analyst at Sydbank, said by phone. “It’s good news for DSV.”
DSV initially dropped takeover plans with UTI in December after a Bloomberg News report revealing it had been in talks caused UTI shares to spike, reaching $14.75 on Dec. 3. This year, UTi has lost 61 percent of its market value after the Long Beach, California-based firm slashed its profit forecast.
“DSV is good at buying companies with problems and turning their profits around,” Pedersen said. “But UTI will probably be the least well-performing major target in DSV’s takeover history, so this will also represent a big challenge.”
UTI on Sept. 3 cut its 2016 profit forecast for the second time in six months after earlier in the year announcing job and cost cuts.
DSV Chief Executive Officer Jens Bjoern Andersen had signaled this year he’s seeking large takeovers after focusing on small and medium-sized targets during the financial crisis. The Hedehusene, Denmark-based company, which has bought 30 rivals in the past decade, has used the purchases to become Europe’s third-largest trucking company.
DSV will help finance the takeover by selling 5 billion kroner ($760 million) of new shares over 12 months. Danske Bank, ING and Nordea Bank will help finance the deal, DSV said.
The two companies had combined sales of $13 billion in 2014 and will have 44,000 employees in 84 countries. DSV said it expects UTI’s profit margin to improve so that, in the “long term,” the combined entity will deliver the same margins as the Danish company.