DSV (DSVDC; A3/A-; S) Reports it has won ~€14b bid for DB Schenker
We have mentioned this before but to reiterate, it refused to comment on Schenker in July (last earnings call) but it was asked about M&A funding;
Q: "And secondly, just on your balance sheet, having in mind your M&A strategy, I'm thinking at sort of maximum levels of net debt EBITDA, which you believe the business could sustain temporarily. You know would you be willing to go to 3, 3.5 times net debt EBITDA temporary, in case there is a large acquisition or that would be too high. Can you give us any color, how you think at your capacity there on the balance sheet?"
A: "I think it would be hypothetical to discuss at what level we should have, one thing that is, though clear we have a good cooperation with our rating agencies and then we can maintain our, our rating even if we are outside the 2.0 for a period of time, as long as we prove that we are able to pay back and get below the 2.0 again. I think that's the strategy, that we don't change the rating of the company. But there are many ways, as Michael says, that we can handle that."
Raters should be understanding on a leverage bump given it is a seasoned M&A operator who has been on A-/A3 for last 3 years and held BS leverage low for the last ~7 years. We are still bracing for supply though - even if we assume net 2.5x pro-forma we are looking at circa €7.5b in supply.