Agility, a leader in supply chain services, said that it expects to complete the sale of its Global Integrated Logistics (GIL) business to DSV Panalpina A/S (DSV), a Danish transport and logistics company.

The all-shares transaction gives Agility 19,304,348 DSV shares upon full completion of the deal in all jurisdictions, representing approximately 8 per cent of all post-transaction shares of DSV. This makes Agility the second largest DSV shareholder based on today’s shareholder register.

The enterprise value of the transaction is $4.775 billion and the equity value is $4.675 billion.

“We’ve shown that Agility knows how to build and scale successful businesses. This deal affirms Agility’s global strategy and execution, and positions us for a new era of growth,” said Tarek Sultan, Agility Vice Chairman and CEO.

Agility: profits soar

“We’re moving forward with a strategic investment in DSV, one of the world’s best-performing logistics providers. We will accelerate growth in the businesses we continue to operate, which historically account for around 80 per cent of our EBIT. And we will continue investing in businesses that are driving sustainable innovation in supply chain and transportation. Our future will be built around businesses, technology and investment that expand access to global trade and make supply chains faster, smarter, greener, fairer and more efficient and resilient.”

Sultan said Agility’s next phase of growth will create additional shareholder value. “In the last decade, Agility created almost $7 billion in value for shareholders, increasing it five fold since 2011. We are determined to sustain this momentum going forward.”     

In addition to its stake in DSV, Agility receives a seat on the DSV board of directors. “This is a chance for us to share ideas and find areas where we can collaborate with a visionary DSV leadership team that, like us, is determined to shape the supply chains of the future,” Sultan said.

With the acquisition of GIL, DSV becomes a global top-three player in the freight forwarding industry with an expected combined revenue of roughly $26 billion and 75,000 employees worldwide.

Jens Bjørn Andersen, Group CEO of DSV Panalpina, said: “I am very pleased to welcome our new colleagues from GIL on this important day. There are many similarities when you look at our two companies both in terms of the business models and services and, not least, when we look at our shared focus on local empowerment and putting customers first.

“DSV and GIL simply constitute an excellent match. We will now start the integration, and together, we are going to grow the business and bring even more value to our many customers, partners and shareholders than we do separately.” 

Regulatory clearances are pending in a limited number of jurisdictions, which are not material in the context of the overall size of the transaction, an Agility statement said.

Q2 net profit surges

The logistics major reported a second quarter 2021 earnings of 18.32 fils per share on net profit of KD38.6 million, up 503 per cent over the same period last year.

EBIT increased 202.6 per cent to KD 29.6 million, and revenue grew 26.6 per cent to KD112.2 million.

For the first 6 months of 2021, earnings were 24.33 fils per share on net profit of KD51.2 million, an increase of 215.9 per cent over the same period in 2020. EBIT increased 39.6 per cent to KD40.1 million, and revenue grew 13 per cent to KD 220.2 million.

All of Agility’s largest businesses reported Q2 growth and profitability levels that were at or above pre-pandemic levels in 2019.

For the second quarter, Agility said it is reporting Global Integrated Logistics' (GIL) results on a limited basis. Reporting will be done as per IFRS 5, covering non-current assets held for sale and discontinued operations.

On the balance sheet this quarter, GIL is reported as single line items as Assets and Liabilities Held for Sale. On Agility’s Profit and Loss (P&L) statement, GIL is reported as Income from Discontinued Operations.

Once the transaction has been completed, Agility’s investment in DSV will be reported as per IFRS 9 as a “financial asset at fair value.”

“We’re proud of how we’ve been able to respond and recover from the challenges of the Covid-19 pandemic,” remarked Sultan.

GIL continues to witness favourable market conditions in freight forwarding and growth in contract logistics, which drove a revenue increase of 33 per cent.

Higher volumes, yield improvements, combined with ongoing cost control practices, led to exceptional year-over-year improvement in GIL profitability for the quarter.