Freight Giant Kuehne & Nagel Says It Has `Firepower' for M&Aby and
Ocean-cargo No. 1 keen on quick-to-do deals to boost margins
CEO Trefzger says move for Dutch player Ceva not on agenda
Kuehne & Nagel International AG, the world’s biggest sea-freight company, said it’s on the hunt for acquisitions that deliver capabilities the Swiss business couldn’t easily develop on its own.
“We’re always looking for M&A opportunities but we aren’t in any concrete talks, or not talks we can discuss publicly,” Chief Executive Officer Detlef Trefzger said in an interview Wednesday. “We have firepower for acquisitions, and we are on alert for acquisitions that we can complete very quickly.”
Kuehne last year bought Re Transportation Inc. for 221 million Swiss francs ($221 million) to strengthen its overland business, the first sizable deal in about a decade. It has eschewed larger transactions to focus on turning around trucking as well as weeding out low-margin contracts from its sea-freight portfolio.
The company hasn’t held talks on acquiring Ceva Holdings LLC, a Dutch logistics business with 41,000 staff and sales of almost $7 billion, Trefzger said. Industry newsletter Loadstar last month reported “speculation” over a Kuehne bid for Ceva, which is owned by private-equity firm Apollo Global Management LLC.
“The key thing is not the size of the acquisition but whether it adds value to our business,” the CEO said in Zurich. “What can an acquisition give us in two to three years that we wouldn’t be able to achieve ourselves?”
Net income at Kuehne advanced 5.4 percent to a record 679 million Swiss francs last year. The company will nevertheless limit its annual dividend to 5 francs a share, refraining from making a special payout as it has in the past two years, a move that would preserve cash for any prospective deal.
Kuehne has shifted focus of its marine arm toward smaller enterprises to which it can sell services beyond port-to-port connections, lifting earnings 25 percent at constant currency rates. While the company is the largest sea-freight forwarder, ahead of Deutsche Post AG’s DHL unit, Deutsche Bahn AG’s DB Schenkerand Panalpina Welttransport Holding AG, it has only a 2 percent market share.
“The sea-freight market is very fragmented,” Chief Financial Officer Markus Blanka-Graff said. “The volume is out there if we want it. However, volume growth alone is no good; we want profitable volume.”