DSV paying about $1.35 billion for UTi

COPENHAGEN, October 9 (Reuters) – Danish transport and logistics group DSV is buying UTi Worldwide in a deal that values the U.S.-based rival at $1.35 billion, saying the deal offered to give it greater global reach as well as opportunities for synergies and cost savings.

But analysts also noted UTi’s recent performance as a challenge for DSV. The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

The transaction is conditional on obtaining the approval of UTi shareholders at an extraordinary shareholders’ meeting, DSV said, noting that UTi’s largest shareholders, funds controlled by P2 Capital Partners, with about 10.8% of the ordinary shares and all of the convertible preference shares, support the transaction. Headquartered in California, UTi has 21,000 employees in 58 countries and had a turnover of 3.9 billion dollars in the 12 months ending July 31, 2015. 8, 2015, the company said in a press statement. The combined force will now have a more balanced geographic foothold, with 61 percent of its revenue coming from business in Europe, the Middle East and North Africa (EMEA); 17 percent in the Americas; 16 percent in Asia; and 6 percent in the sub-Saharan African region.

“We complement each other perfectly, both in terms of business activities and geography”, DSV Chairman Kurt Larsen said.

“We are operating in an industry where increasingly scale is critical”, said Roger MacFarlane, chairman of UTi’s board. “As a result, the Board of Directors of UTi has unanimously approved the agreement with DSV and strongly recommends that our shareholders accept the offer”.

Subject to regulatory approvals, the deal is expected to be completed in the first quarter of 2016.

DSV has 530 offices and 130 logistics facilities in 75 countries, with about 23,000 employees.