Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Bloomberg now reporting DSV has pledged to limit job cuts at Schenker to 1.6k-1.9k if it wins. Seems to be in response to a labour union writing a memo to Deutsche Bahn and the German government last week warning if DSV would win 5.3k MORE jobs would be at risk (hence effectively endorsing the CVC backed PE consortium). It continues back-and-forth concessions being offered by both to sweeten their deals. Key from this afternoon's Bloomberg article;
"While Deutsche Bahn has signalled to both suitors it isn’t happy with their proposals yet, DSV’s €14 billion ($15.5 billion) offer is currently preferred, some of the people said. CVC has bid around the same amount, but tied a small portion of the purchase price to the condition that Schenker meets its own profit targets over the next few years, people familiar with the matter said last week."
DSV winning this should be priced in full now given the coin toss odds - and is in the belly (29/30/31s). Those on the side-lines should wait potential supply - cash shortfall is €12.8b. Despite being margin dilutive at face level (EBIT 3-6% vs. DSV's 7-12%) DSV has a history of doing large acquisitions, doubling in size in under a decade while keeping margins and BS in check. Full debt funding for this will add 2.9x turns of leverage onto current 1.8x (assuming no debt comes with Schenker).
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.