Rumors are circulating that part of the leading US logistics service provider, C.H. Robinson, is the next target for acquisition by DSV.
Reuters published a story last week, quoting anonymous sources, stating that “DSV, which is looking to expand in North America, last week met with a small group of investors and said that it would be interested in acquiring C.H. Robinson’s global forwarding business, which would give it critical access to transpacific ocean trade lanes”. It was suggested that the price for forwarding unit would be “as much as $9 billion”
Caution should be shown towards such stories as journalists can be used by various parties to influence the outcome of negotiations.
Reuters implied that C.H. Robinson’s inclination to consider selling part of its business was related to its conflict with activist investment company Ancora Advisors, who have managed to gain two seats on C.H. Robinson’s board as well as having formed a ‘strategic options’ committee for the company.
Certainly, DSV has stated that having absorbed Agility’s ‘Global Integrated Logistics’ business which it acquired last year, it is now on the lookout for further deals. The likelihood that these would include forwarding business with substantial exposure to Asia Pacific is high as it is a growing market where DSV has a somewhat weaker presence.
For C.H. Robinson, selling its forwarding business would be a notable development but far from the end of the company. Forwarding accounts for around a third of the business by revenue and it gives the company valuable exposure to markets outside the US. However, C.H. Robinson’s core business has always been ‘freight brokerage’ in the US where it is a leading provider, generally delivering steady profit growth. Selling its freight forwarding would still leave it a substantial logistics service provider in North America. Profits in both businesses have been leaping upward in double-digit percentages and C.H. Robinson is a substantial forwarder, but its market position in air and sea forwarding is not as strong as in freight brokerage. Selling the forwarding business at the top of the market may be attractive in the short-term.
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