In a notable strategic shift, DSV, the Danish transport and logistics company, announced on Friday that it has officially discontinued its ongoing share buyback program. This decision follows the company’s all-cash agreement to purchase the logistics arm of the German railway operator Deutsche Bahn, known as Schenker.
The buyback, which was initiated on July 24, was originally designed to help DSV adjust its capital structure through the acquisition of shares valued up to 1.50 billion kroner. Prior to its termination, DSV had repurchased shares worth 643.7 million kroner, with the program set to end on the previously established date of October 22. The discontinuation of the share buyback program coincides with the announcement of a “transformative transaction” that will see DSV acquire Schenker and all associated affiliates.
This merger is set to create a formidable global transport and logistics entity, boasting a combined workforce nearing 147,000 employees spread across more than 90 countries. The companies expect to achieve a combined revenue of 293 billion kroner based on pro-forma financial projections for the entire fiscal year of 2023. Under the terms of the agreement, DSV will secure the Deutsche Bahn unit for an enterprise value of 14.3 billion euros, translating to an equity value of 11 billion euros.
DSV plans to finance this significant acquisition over the next 12 months, utilizing a mix of up to 5 billion euros in equity financing and bank loans. The transaction is anticipated to finalize in the second quarter of 2025, contingent upon the approval from Deutsche Bahn’s supervisory board and the German Federal Ministry for Digital and Transport. While analysts believe that the transaction will not affect DSV’s financial results in the year 2024, it is projected to enhance the company’s earnings per share (EPS) in the second year post-completion.
DSV has also expressed its intention to elevate the operating margin of the newly formed entity, aiming to maintain at least the same levels as its current margin by the third year following the deal’s closure. “This is a transformative event in DSV's history, and we are very excited to join forces with Schenker.
The acquisition will allow us to combine two strong companies, forging a world-leading transport and logistics powerhouse that will deliver significant benefits for our employees, customers, and shareholders,” commented Jens Lund, Chief Executive of DSV. Analysts at Bernstein described the acquisition as a “good deal at a good price,” reflecting positive anticipations regarding the merger's implications for DSV’s market position. Early trading results showed a positive response from the market, with DSV’s shares climbing 1%, trading at $1388.50, up by 0.98% or $14.
This growth signals investor confidence in the strategic direction set out by DSV’s leadership in response to the merger and market dynamics..