Monday, February 4, 2019

Battle for Control of Major Freight Forwarder and Logistics Provider Hots Up

3PL Principal Shareholder Turns Down Initial Offer
Shipping News Feature
SWITZERLAND – DENMARK – WORLDWIDE – DSV, having withdrawn it's bid for fellow freight forwarding and logistics giant CEVA in October 2018 after that company's latest major shareholder, French container shipping line CMA CGM ran interference on the deal, it would seem the Danish group's attempt to wrest control of the Panalpina organisation may also be failing. Panalpina employs around 14,000 people in 500 locations globally.

The Board of Directors at Panalpina has revealed that the Ernst Göhner Foundation, the group’s largest shareholder with between 43% and 46% of the stock, has informed it that it does not support the current non-binding proposal from DSV and that it supports Panalpina’s Board of Directors in pursuing an independent growth strategy that includes future mergers and acquisitions.

Whilst the Board agrees that its fiduciary duties include the responsibility to review the situation with its professional advisers, it seems extremely unlikely that the deal can ever progress without the support of a Foundation whose founding principles include the prevention of a hostile takeover which might affect the running of the business.

If the Board supports this intransigence, and other financial operations with shares may not be as reluctant to take a deal which at today’s rates would mean a premium per share of 12.70 CHF as the offer stands (1.58 DSV shares plus 55 CHF in cash for each Panalpina share), DSV may of course decide to put in an improved offer.

Ernst Göhner formed a Foundation in 1957 which was transformed up until his death in 1971 into possibly the largest such organisation in Switzerland. Ever concerned with the welfare of both his family and his thousands of employees across a range of companies, he ensured that Panalpina and his other shipping interests, would be protected after his passing.

The likelihood of DSV being able to purchase a controlling interest in Panalpina without the support of the largest shareholder seems extremely slim. There have of course been cases historically when freight interests have paid very high premiums for ‘the last house in the street’ in order to wrest the control of a targeted business but, despite DSV’s successful record in growth through acquisitions this one may, like the CEVA deal, be a bid too far.