Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Panalpina Welttransport Holding / Event-Driven

After investors lashed out at <a href="https://www.smartkarma.com/entities/22460" target="_blank" data-smartkarma-citation="entities:22460:1">Panalpina Welttransport Holding (PWTN SW)</a>'s board late last year (after years of griping by some of the top holders), forcing the main shareholder to support the installation of a new chairman of the board, management may have thought they had some breathing room. They did not.Rival <a href="https://www.smartkarma.com/entities/22579" target="_blank" data-smartkarma-citation="entities:22579:1">Kuehne + Nagel International A (KNIN VX)</a> quickly (a couple of days later) showed interest in friendly negotations via the press, and Panalpina responded in the press that it wanted to stay independent. Danish rival <a href="https://www.smartkarma.com/entities/22343" target="_blank" data-smartkarma-citation="entities:22343:1">DSV A/S (DSV DC)</a> had shown interest before, then had gone after <a href="https://www.smartkarma.com/entities/27764" target="_blank" data-smartkarma-citation="entities:27764:1">Ceva Logistics AG (CEVA SW)</a> as discussed by <a href="https://www.smartkarma.com/profiles/840" target="_blank" data-smartkarma-citation="accounts:840">David Blennerhassett</a> in <a href="https://www.smartkarma.com/insights/ceva-s-days-of-independence-appear-numbered" target="_blank" data-smartkarma-citation="insights:25931">CEVA's Days Of Independence Appear Numbered</a> when the CMA CGM deal came out.Now DSV has lobbed in a bid for the company.<h2>The New News</h2>On January 16th Panalpina Welttransport <a href="http://www.panalpina.com/www/global/en/home/newsroom.html#/pressreleases/panalpina-statement-on-unsolicited-non-binding-approach-from-dsv-2824608" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://www.panalpina.com/www/global/en/home/newsroom.html%23/pressreleases/panalpina-statement-on-unsolicited-non-binding-approach-from-dsv-2824608&amp;source=gmail&amp;ust=1547732461190000&amp;usg=AFQjCNFYZHaKcszeIaw3gH2lSbxbixUjpw">announced</a> that it had received an unsolicited, non-binding proposal from <a href="https://www.smartkarma.com/entities/22343" target="_blank" data-smartkarma-citation="entities:22343:1">DSV A/S (DSV DC)</a> to acquire the company at a price of CHF 170 per share, consisting of 1.58 DSV shares and CHF 55 in cash for each Panalpina share. The offer comes at a premium of 24% to Panalpina’s closing share price of CHF 137.5 as of 11 January 2019 and 31% to the 60-day VWAP of CHF 129.5 as of 11 January 2019.Following the announcement, Panalpina's shares surged above the terms of the offer implying that the market was anticipating a higher bid from DSV or one of its competitors. DSV claimed in its <a href="http://investor.dsv.com/news-releases/news-release-details/dsv-734-dsv-contact-panalpina-welttransportholding-ag" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://investor.dsv.com/news-releases/news-release-details/dsv-734-dsv-contact-panalpina-welttransportholding-ag&amp;source=gmail&amp;ust=1547732461190000&amp;usg=AFQjCNE4M0TSGDCLVlxvEZbSIJmclJFdWA">announcement</a> that the “combination of DSV and Panalpina would create a leading global transport and logistics company with significant growth opportunities and potential for value creation” and that the structure of the offer will allow Panalpina’s shareholders to participate in the benefits of the combination.”They also stated that “the combined business would generate expected revenues of more than DKK 110bn and EBITDA of more than DKK 7bn on a <span id="m_-1173538474528467035gmail-11" class="m_-1173538474528467035gmail-gr_ m_-1173538474528467035gmail-gr_11 m_-1173538474528467035gmail-gr-alert m_-1173538474528467035gmail-gr_spell m_-1173538474528467035gmail-gr_inline_cards m_-1173538474528467035gmail-gr_run_anim m_-1173538474528467035gmail-ContextualSpelling">pro-forma 2018 basis (excluding any synergy benefits).”DSV’s approach to Panalpina comes just months after it failed in an attempt to buy Switzerland’s <a href="https://www.smartkarma.com/entities/27764" target="_blank" data-smartkarma-citation="entities:27764:1">Ceva Logistics AG (CEVA SW)</a>. Given the fragmented nature of the industry, DSV sees scale as a clear competitive advantage in the logistics market as operational leverage and purchasing power increase with rising freight volumes. As a result, M&amp;A is currently an integral part of their strategy.<a href="https://www.reuters.com/article/us-panalpina-dsv-mergers/danish-freight-firm-dsv-makes-4-billion-play-for-panalpina-idUSKCN1PA0JS" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.reuters.com/article/us-panalpina-dsv-mergers/danish-freight-firm-dsv-makes-4-billion-play-for-panalpina-idUSKCN1PA0JS&amp;source=gmail&amp;ust=1547732461190000&amp;usg=AFQjCNE88aKFlEt-KxEhXrvT4bPpMRVLpQ">Media reports</a> suggested that Switzerland’s Kuehne &amp; Nagel was also rumored to be considering an offer for Panalpina.Panalpina's <a href="http://www.panalpina.com/www/global/en/home/newsroom.html#/pressreleases/panalpina-statement-on-unsolicited-non-binding-approach-from-dsv-2824608" target="_blank">response</a> is "According to its fiduciary duties, the Board of Directors of Panalpina is reviewing the proposal in conjunction with its professional advisers."Amid Panalpina's struggles in ocean freight, IT system delays and below-average growth, activist investor Cevian Capital, which owns 12.3% of Panalpina has publicly urged Panalpina to be open for a takeover. Panalpina's largest shareholder, Ernst Goehner Foundation, owns a stake of approximately 46% and any deal will depend significantly on its approval. Given the fragmented nature of the industry, DSV sees scale as a clear competitive advantage in the logistics market as operational leverage and purchasing power increase with rising freight volumes. As a result, M&amp;A is currently an integral part of their strategy.This is an interesting situation. The question is whether it gets interestinger.

After investors lashed out at Panalpina Welttransport Holding (PWTN SW)'s board late last year (after years of griping by some of the top holders), forcing the main shareholder to support the installation of a new chairman of the board, management may have thought they had some breathing room. They did not.Rival Kuehne + Nagel International A (KNIN VX) quickly (a couple of days later) showed interest in friendly negotations via the press, and Panalpina responded in the press that it wanted to stay independent. Danish rival DSV A/S (DSV DC) had shown interest before, then had gone after Ceva Logistics AG (CEVA SW) as discussed by David Blennerhassett in CEVA's Days Of Independence Appear Numbered when the CMA CGM deal came out.Now DSV has lobbed in a bid for the company.The New NewsOn January 16th Panalpina Welttransport announced that it had received an unsolicited, non-binding proposal from DSV A/S (DSV DC) to acquire the company at a price of CHF 170 per share, consisting of 1.58 DSV shares and CHF 55 in cash for each Panalpina share. The offer comes at a premium of 24% to Panalpina’s closing share price of CHF 137.5 as of 11 January 2019 and 31% to the 60-day VWAP of CHF 129.5 as of 11 January 2019.Following the announcement, Panalpina's shares surged above the terms of the offer implying that the market was anticipating a higher bid from DSV or one of its competitors. DSV claimed in its announcement that the “combination of DSV and Panalpina would create a leading global transport and logistics company with significant growth opportunities and potential for value creation” and that the structure of the offer will allow Panalpina’s shareholders to participate in the benefits of the combination.”They also stated that “the combined business would generate expected revenues of more than DKK 110bn and EBITDA of more than DKK 7bn on a pro-forma 2018 basis (excluding any synergy benefits).”DSV’s approach to Panalpina comes just months after it failed in an attempt to buy Switzerland’s Ceva Logistics AG (CEVA SW). Given the fragmented nature of the industry, DSV sees scale as a clear competitive advantage in the logistics market as operational leverage and purchasing power increase with rising freight volumes. As a result, M&amp;A is currently an integral part of their strategy.Media reports suggested that Switzerland’s Kuehne &amp; Nagel was also rumored to be considering an offer for Panalpina.Panalpina's response is "According to its fiduciary duties, the Board of Directors of Panalpina is reviewing the proposal in conjunction with its professional advisers."Amid Panalpina's struggles in ocean freight, IT system delays and below-average growth, activist investor Cevian Capital, which owns 12.3% of Panalpina has publicly urged Panalpina to be open for a takeover. Panalpina's largest shareholder, Ernst Goehner Foundation, owns a stake of approximately 46% and any deal will depend significantly on its approval. Given the fragmented nature of the industry, DSV sees scale as a clear competitive advantage in the logistics market as operational leverage and purchasing power increase with rising freight volumes. As a result, M&amp;A is currently an integral part of their strategy.This is an interesting situation. The question is whether it gets interestinger.

Beleaguered Panalpina Gets An Unsolicited Takeover Offer

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Our long-term bullish outlook remains intact. The weight of the evidence still points to further upside, allowing, of course, for occasional backing and filling. That said, we are selective about new buy recommendations.  In today’s report we provide a recap of our investment thesis and sector weightings, and highlight actionable ideas within cyclical Groups, including Air Freight &amp; Logistics, Truckers, and Paper &amp; Packaging.

Our long-term bullish outlook remains intact. The weight of the evidence still points to further upside, allowing, of course, for occasional backing and filling. That said, we are selective about new buy recommendations.  In today’s report we provide a recap of our investment thesis and sector weightings, and highlight actionable ideas within cyclical Groups, including Air Freight &amp; Logistics, Truckers, and Paper &amp; Packaging.

United States

XPO Logistics, Inc. provides logistics services. The Company offers expedited airfreight forwarding, warehousing management, drayage, freight brokerage, intermodal, transportation, and reverse logistics. XPO Logistics serves customers throughout North America.

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Xpo Logistics (XPO US)

Beleaguered Panalpina Gets An Unsolicited Takeover Offer

After investors lashed out at Panalpina Welttransport Holding (PWTN SW)'s board late last year (after years of griping by some of the top holders),...

Travis Lundy

U.S. Equity Strategy

Our long-term bullish outlook remains intact. The weight of the evidence still points to further upside, allowing, of course, for occasional...

Vermilion Research

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