UTi Worldwide Inc., the U.S. logistics firm whose biggest shareholder is hedge fund P2 Capital Partners, and DSV A/S, the Nordic region’s biggest trucking company, ended talks after news of DSV’s potential acquisition sent UTi’s shares surging, a person with knowledge of the matter said.
The two sides had been negotiating a deal that would have valued UTi at $13 to $14 a share, said the person, who asked not to be identified because the details are private. The discussions stalled after Bloomberg News reported the two were in advanced talks, sending UTi’s stock as high as $14.75 yesterday, the person said. UTi, which is based in Long Beach, California, had been in sale discussions since mid-2014 and could have reached an agreement with DSV as soon as this month, people familiar with the situation said earlier in the day.
“Although UTi can confirm that exploratory conversations have taken place between the companies, in response to an inquiry from DSV A/S, those discussions never progressed beyond a preliminary stage,” the company said in a statement. “Currently, there are no discussions taking place between the companies.”
UTi, which ranks No. 9 on Transport Topics Top 50 Logistics Companies, closed up 20% at $13.88 on Dec. 3, after earlier soaring as much as 28%. The stock trimmed those gains in late trading. UTi has a market value of about $1.5 billion, while Broendby, Denmark-based DSV has a market value of about $5.5 billion.
UTi plans to report financial results for its fiscal third quarter Dec. 9, followed by a conference call with investors.
Prior to Dec. 3, UTi had lost about one-quarter of its market value since disclosing Feb. 25 that it had breached some loan covenants. The company issued new debt, as well as convertible preferred shares to P2 Capital to fix the liquidity crunch — making P2 UTi’s biggest investor. UTi hired Morgan Stanley a few months ago to explore options, including a sale, people familiar with the matter said.
DSV, founded by 10 truckers in 1976, has expanded through acquisitions to become Denmark’s sixth-biggest listed company by revenue. It purchased Brussels-based ABX Logistics Worldwide SA in 2008. CEO Jens Bjoern Andersen said in February that acquisitions “will be high on the agenda for DSV in 2014.”
UTi, like ABX, doesn’t own transport vehicles or vessels. It’s a non-asset-based forwarder, with services that include customs brokerage and warehousing. Air- and ocean-freight forwarding were its biggest businesses during its 2014 fiscal year, accounting for about 59% of the company’s $4.4 billion in revenue.