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DSV (DSVDC; A3/A-; S) confirms €14.3b Schenker deal

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It has won the bid for Schenker valuing the unit at EV of €14.3b. This is #3 (DSV) in global logistics acquiring #4 (Schenker) to form world's largest. Revenue between Air/Sea/Road & Contract-logistics stays relatively unch (quiet evenly split), geography also remains relatively unch (62% skew to EMEA). We see leverage moving from net 1.8x to 3x, we expect €5-6.5b of supply (revised down as it equity finances ~40% of it). We don't expect rating changes.

  • It has said it will use €4-5b in equity financing and remains "committed to maintain our current credit ratings".
  • EV of €14.3b vs. equity value of €11b implies €3.3b of debt coming with Schenker (this won't be supply though). Financing the remaining equity value implies ~€6.5b of supply (could be as low as €5b if it draws on its current cash).
  • Leverage will move from net 1.8x to 3x.
  • Reminder this is margin dilutive (EBIT 3-6% vs. DSV's 7-12%) but it has stated goal to lift combined EBIT margins to at least DSV's current (12% in FY23) within 3 years of close. 2023 blended margin for combined entity is 8.9%.
  • Close expected in 2Q25 and on good governance the €200m buyback programme has been cancelled.
  • The fact equities are continuing to celebrate despite the equity financing is a vote of confidence in the seasoned M&A operator.

There will be a call at 11:30am London join here

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It has won the bid for Schenker valuing the unit at EV of €14.3b. This is #3 (DSV) in global logistics acquiring #4 (Schenker) to form world's largest. Revenue between Air/Sea/Road & Contract-logistics stays relatively unch (quiet evenly split), geography also remains relatively unch (62% skew to EMEA). We see leverage moving from net 1.8x to 3x, we expect €5-6.5b of supply (revised down as it equity finances ~40% of it). We don't expect rating changes.

  • It has said it will use €4-5b in equity financing and remains "committed to maintain our current credit ratings".
  • EV of €14.3b vs. equity value of €11b implies €3.3b of debt coming with Schenker (this won't be supply though). Financing the remaining equity value implies ~€6.5b of supply (could be as low as €5b if it draws on its current cash).
  • Leverage will move from net 1.8x to 3x.
  • Reminder this is margin dilutive (EBIT 3-6% vs. DSV's 7-12%) but it has stated goal to lift combined EBIT margins to at least DSV's current (12% in FY23) within 3 years of close. 2023 blended margin for combined entity is 8.9%.
  • Close expected in 2Q25 and on good governance the €200m buyback programme has been cancelled.
  • The fact equities are continuing to celebrate despite the equity financing is a vote of confidence in the seasoned M&A operator.

There will be a call at 11:30am London join here