CEVA rejects acquisition offer by DSV

The Swiss company said it instead plans to explore measures to enhance its performance with CMA CGM.    Denmark’s DSV said Thursday that it had made a private offer to acquire CEVA Logistics for about $1.54 billion, but that the proposal was rejected by CEVA’s board of directors.
   CEVA said the offer was inadquate and that it preferred to explore measures to enhance performance with the French container carrier CMA CGM, which owns a quarter of CEVA. CMA CGM said it is “considering an increase in its shareholding of CEVA with a view to providing the company with the required stability to achieve its transformation.”
   CEVA, which is based in Baar, Switzerland, said its board of directors “carefully reviewed the proposal with the support of its legal and financial advisors and unanimously concluded that the proposal is not in the best interest of the company and its shareholders.”
   Though DSV said its offer of 27.75 Swiss francs per share would have provided CEVA shareholders “with an attractive premium of 50.7 percent to CEVA share price as of October 10 and 37 percent to the 60-day volume weighted average price as of October 10,” CEVA said its board “concluded that the proposal significantly undervalues CEVA’s prospects as a standalone company.”
   In terms of gross revenue in 2017, the consulting firm Armstrong & Associates ranked DSV as the world’s sixth- largest third-party logistics provider ($11.37 billion) and CEVA Logistics as the 10th largest ($6.99 billion).
    Until this May, CEVA had been a privately held company with three principal shareholders: Capital Research and Management Co.(26 percent), Franklin Advisers Inc. (25 percent) and Apollo Global Management LLC (22 percent). It made an initial public offering in May, and its shares today are listed on the SIX Swiss Exchange, and the French container carrier CMA CGM acquired a 24.99 percent stake in CEVA.
   CEVA said Thursday that with CMA GGM as a strategic partner, it “has been exploring measures to enhance performance in order to unlock CEVA Logistics’ full potential.”
   As a result, CEVA said DSV’s “unsolicited proposal is therefore inadequate” and that it has “decided to not engage on the basis of this unsolicited proposal.”
   CEVA said at the request of CMA CGM its board agreed to modify a stand-still agreement that would allow CMA CGM to increase its holdings in CEVA up to one-third of voting shares.
    Reuters reported that “at 33.3 percent of the voting rights, the Marseille-based company would have to launch a takeover offer for the whole business under Swiss regulations.”
    CMA CGM said it supported CEVA’s decision and that it has a desire to “unlock CEVA’s potential.”
    CMA GGM said it has the “recognized operational expertise and turnaround track record to reinforce CEVA’s management and organization and help it deliver a quicker and deeper turnaround.”
   As the fourth-largest container carrier (after Maersk, MSC and COSCO-OOCL), CMA CGM said it will “generate new commercial opportunities for CEVA, particularly through its long-standing relationships with customers looking for more integrated end-to-end offers.”
   CMA CGM also said it will “contribute its freight management activities, thereby reinforcing the CEVA platform and delivering scale benefits” and “support accelerated investments to secure CEVA’s IT transformation.”
   CEVA said other obligations made by CMA CGM “remain in place, in particular the obligation of CMA CGM to tender its shares into a public tender offer by a third party if recommended by the board of directors unless CMA CGM launches a superior offer.”
   “In addition, CMA CGM has agreed, under certain conditions, to not launch or trigger an offer without the recommendation of the (CEVA) board of directors in the next six months (other than an offer which is superior to another offer),” CEVA said.
   DSV said its offer of 27.75 Swiss francs per share would have provided CEVA shareholders “with an attractive premium of 50.7 percent to the CEVA share price as of October 10 and 37 percent to the 60-day volume weighted average price of 20.25 as of October 10.”
   It said a combination of DSV and CEVA would “be in the best interests of the stakeholders of both companies as it presents a unique opportunity to build on the successful legacies of our businesses by extending our service offering and giving our combined operations additional scale.”
   DSV said it “has no dialogue with CEVA regarding a voluntary public tender offer for the outstanding equity of CEVA” and said it “does not intend to make any additional comments on this matter.”
   DSV acquired the U.S. forwarder UTi in 2015.