UTi, DSV Said to Halt Talks as U.S. Company’s Shares JumpJeffrey McCracken, Beth Jinks and Aaron Kirchfeld
UTi Worldwide Inc. and DSV A/S, the Nordic region’s biggest trucking company, ended takeover talks after news of a potential acquisition of the U.S. logistics firm sent its shares surging, two people with knowledge of the matter said.
The companies were in discussions as recently as yesterday, negotiating a deal that could value UTi at $13 to $14 a share, said the people, asking not to be identified because the information is private. The talks stalled after Bloomberg News reported that they were taking place, sending UTi’s stock as high as $14.75 yesterday, the people said.
UTi gave back some of those gains today, falling 7.3 percent to $12.87 at the close in New York, after both companies said the talks had ended. DSV slipped less than 1 percent to
185.6 kroner in Copenhagen.
“Currently there are no discussions taking place between the companies,” UTi said in a statement that described the talks as “exploratory conversations.”
UTi, which is based in Long Beach, California, had been in sale discussions since mid-2014 and could have reached an agreement with DSV as soon as this month, people familiar with the situation said earlier in the day.
Deal teams at both companies were analyzing a potential agreement at the time the Bloomberg story went out yesterday, one of the people said. The talks have ended for now, the person added, saying large shareholders at the two companies might weigh in on the merits of a deal since both sides acknowledged the discussions.
Before yesterday, UTi had lost about one-quarter of its market value since disclosing on Feb. 25 that it had breached some loan covenants. The company issued new debt, as well as convertible preferred shares to P2 Capital Partners to fix the liquidity crunch -- making P2 UTi’s biggest investor. UTi hired Morgan Stanley a few months ago to explore options including a sale, people familiar with the matter said.
The company is scheduled to report financial results for its fiscal third quarter on Dec. 9 before the market opens for trading, followed by a conference call with investors.
DSV, founded by 10 truckers in 1976, has expanded through acquisitions to become Denmark’s sixth-biggest listed company by revenue. It purchased Brussels-based ABX Logistics Worldwide SA in 2008. Chief Executive Officer Jens Bjoern Andersen said in February that acquisitions “will be high on the agenda for DSV in 2014.”
UTi, like ABX, doesn’t own any transport vehicles or vessels itself. It’s a non-asset-based forwarder, with services that include customs brokerage and warehousing. Air and ocean-freight forwarding were its biggest businesses during its 2014 fiscal year, accounting for about 59 percent of the company’s $4.4 billion in revenue.