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DSV to buy Panalpina in US$4.6b European logistics deal


DENMARK'S DSV A/S agreed to acquire Swiss rival Panalpina Welttransport Holding AG in a deal worth US$4.6 billion that will create one of the world's largest companies in logistics and freight forwarding.

The board of directors of Panalpina recommended shareholders accept the mostly stock offer worth 196 Swiss francs (S$267) a share, the companies said in a statement on Monday, confirming a Bloomberg report.

Panalpina shares jumped as much 16 per cent to 192.40 francs, while DSV shares reversed an early 2.7 per cent gain to drop 4.9 per cent, the most since Feb 4.

The price represents a 43 per cent premium from Jan 15, the day before DSV's initial proposal, and has the backing of investors holding 69.9 per cent of registered shares including the Ernst Goehner Foundation, which owns 46 per cent of Panalpina and had rebuffed a previous offer.

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DSV is paying a "hefty" price, Zuercher Kantonalbank analyst Marco Strittmatter, who has a market perform recommendation on the Swiss logistics company, wrote in a note.

DSV has grown into the world's fifth-largest freight forwarder through a series of acquisitions over the past decades. In combing with Panalpina, DSV will become the world's third- or fourth-largest freight-forwarder and the No. 2 in air freight, DSV chief executive officer Jens Bjorn Andersen said on Monday.

Panalpina will help boost its air-cargo volumes and ocean-going containers operations, complementing the Danish group's strength in road shipments.

The deal ends months of speculation about the future of Panalpina, which in mid-February announced talks with Agility for a logistics tie-up in an effort to avoid being taken over by DSV. Minority shareholders, including Cevian Capital AB and Artisan Partners, went public with comments in favour of a DSV takeover, adding pressure on Panalpina's management and the foundation. Both investors back the offer, the companies said on Monday.

"We welcome the agreement between Panalpina and DSV," Lars Forberg, managing partner at Cevian Capital, said in a separate statement. "We believe the combination has great industrial logic and will create one of the best companies in the logistics industry."

Event-driven brokers Olivetree Financial Ltd. said the process highlighted the difficulties in working with Panalpina top shareholder Ernst Goehner Foundation. "This feels likely to be the final iteration of a turbulent process and a positive outcome for shareholders," Olivetree said in a note.

DSV made a first unsolicited offer worth 170 Swiss francs a share before sweetening the bid to 180 Swiss francs per share, valuing the target at about 4.3 billion Swiss francs. After the deal, the Ernst Goehner Foundation will become DSV's top holder.

The combination with Panalpina is expected to increase DSV's annual sales by close to 50 per cent, and the new entity will have pro-forma revenue of about US$17.8 billion, a workforce of more than 60,000 employees and operations in more than 90 countries. 

Following completion of the transaction, DSV will propose changing the name of the combined entity to DSV Panalpina A/S. BLOOMBERG

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