Will the bride be wooed?
The future of Panalpina remains written in the stars. DSV may have upped its offer to CHF 180 in cash per share in the meantime, but the Basel-based Swiss logistician has now also commenced discussions with the Kuwaiti corporation Agility. Logistics professor Armin Schwolgin is of the opinion that it will be difficult for Panalpina to remain independent in the long term.
Spring is not immediately around the corner just yet, but the logistics industry is nevertheless witnessing a rather impressive courtship dance. The charmers are focused on the Swiss logistics corporation Panalpina. For a long time the enterprise, stooped in tradition, operated in the industry’s slipstream, without any major spikes in its business performance – be they positive or negative. Though the firm’s maritime activities have represented a constant problem child for Panalpina, the firm is a top player in the airfreight segment. Shareholders may have complained occasionally about a sluggish share price, but the foundation Ernst Göhner Stiftung, which owns 46% of Panalpina, always supported the board.
Foundation vetoed approach
Panalpina slipped out of the comfort zone in January, however, when the Danish logistics corporation DSV made a takeover offer for the company. At that point DSV offered CHF 170, in cash as well as DSV shares, for every Panalpina share. This is more than Panalpina’s shares have ever been worth over the past five years. Those investors who had previously criticised Panalpina’s executive management team were surely interested in the offer; the Ernst Göhner Stiftung, however, was not. It rejected it and focused on independence.
This approach would appear not to have been absolute. Last week Panalpina announced that it was in talks with Agility for a merger between the two firms. The Kuwaiti logistician has completed several takeovers over the past few years, but its strong focus on expansion had appeared to be over. A year ago Essa Al-Saleh, Agility’s CEO for global integrated logistics, told the ITJ that his firm is no longer focusing on the acquisition of large companies (see page 6 of ITJ 9-10 / 2018).
DSV has now clarified that it is not prepared to leave Panalpina to its Middle Eastern rival without a struggle. It has upped its offer to CHF 180 per share – all in cash. It remains open, however, whether the Ernst Göhner Stiftung will be attracted by this. Thomas Gutzwiller, a members of the foundation’s board, told the Swiss business journal Finanz und Wirtschaft that the company’s own IT platform is a strong asset that will increase the value of Panalpina in the medium term. It is also better for Switzerland if Panalpina remains independent.
Synergies are decisive
It remains to be seen whether this will suffice, says economist Armin Schwolgin. As professor of logistics at the Baden Württemberg Cooperative State University in Lörrach he has closely observed market developments in the industry for many years. “One might want Panalpina to remain independent, but it’s too small to be an all-rounder. To be viable it would really have to concentrate on just one niche,” as Schwolgin told the ITJ in a recent conversation.
Every large logistics providers with global activities has a similar portfolio, Schwolgin continued. This entails a certain risk when it comes to taking over a competitor. “Players like to buy markets and volumes. It’s very important for long-term success to make the best of synergies. This is the demanding part of a takeover.”
This could be one of the reasons why Kuehne + Nagel has not shown any interest in Panalpina so far, says Schwolgin. There have not been any advances from China yet either. Though Chinese firms are mostly amongst the interested parties when a major transaction is on the cards in Europe, this trend has not yet become very pronounced in the logistics industry.
Kerry a potentially interested party?
Schwolgin, who is also an adjunct professor at Beijing Wuzi university, sees a simple reason for this. “Up until now there simply wasn’t a big European player on the market.”
On top of this, he adds, the Chinese logistics market works a bit differently than the European one. According to Schwolgin “many companies carry out their own logistics activities, instead of outsourcing them.” Chinese interest in Panalpina is not completely off the cards for Schwolgin, however. Hong Kong-based Kerry Logistics is one brand name that is active globally, after all. “For Kerry, Panalpina would be an attractive option, as it would provide it with direct access to markets in Switzerland and Germany.”
So the status remains that there is official interest in Panalpina from DSV and Agility. Who will the wooed company say yes to? Or will it prefer to remain single? Spring will bring the answer.
