DP World, one of the largest port operators globally, plans to buy South Africa's Imperial Logistics for $890 million, strengthening its footprint in the world's second largest continent.
Johannesburg-listed logistics Imperial Logistics is an integrated logistics and market access company with operations in Africa and Europe.
“The acquisition of Imperial will help DP World to build better and more efficient supply chains for the owners of cargo, especially in Africa,” Sultan Bin Sulayem, group chairman and chief executive of DP World, said in a statement. “Imperial’s operations are complementary to our network of ports, terminals and logistics operations on the continent.”
The deal, to be funded from DP World’s existing available resources, is expected to close by the first quarter of 2022. The share price of Imperial Logistics surged nearly 34 per cent following the offer announcement by DP World.
DP World’s cash offer of 66 South African rand (ZAD) per share implies an equity consideration of around ZAD12.7 billion ($890 million) and represents a premium of 39.5 per cent to the Imperial share price as of July 7 on the Johannesburg Stock Exchange, and a 34.2 per cent premium to the 30-day volume weighted average price, according to the statement.
The transaction, however, is subject to Imperial’s shareholder approval and other customary completion conditions including regulatory approvals.
With a focus on fast-growing industries including healthcare, consumer, automotive, chemicals, industrial and commodities, Imperial has a presence across 25 countries, including a significant footprint in the high growth Africa market.
The ports operator said its acquisition of Imperial will add new capabilities to DP World, particularly in Africa as it aims to improve connectivity between African producers along fast-growing trade lanes to the rest of the world.
Lucrative trade routes
The move builds on DP World's significant expansion across the African continent in recent years with its investments in sea ports, terminals and logistics services as it seeks to tap into lucrative trade routes in the region. Its existing investments in Africa include projects in Egypt, Algeria, Djibouti, Rwanda, Somaliland, Mozambique and Senegal, according to the company's website.
Earlier this month, DP World acquired US logistics firm Syncreon for a total enterprise value of $1.2bn. Syncreon is a US-based global logistics provider specialising in the design and operation of complex supply chains for the high-growth automotive and technology industries.
Last month, DP World said it opened a new container terminal at Berbera Port in Somaliland, with work under way to further expand the terminal's capacity and develop it into a major regional trade hub serving the Horn of Africa. The newly opened container terminal increases the port's container capacity from current 150,000 Twenty Foot Equivalent Units (TEUs) to 500,000 TEUs annually.
In May, the Dubai-based ports operator said it will start development of a greenfield deepwater port in the Democratic Republic of Congo, following amendments to the initial contract between the company and the government. In March 2018, DP World was awarded a 30-year concession to develop and manage the $1bn Banana Port along the DRC's Atlantic coast in a joint venture with the government.
Last year, the ports operator signed an agreement with Senegal to develop its Ndayane deep-water port, making it the company's biggest port investment in Africa at that time. DP World Dakar said it will invest a total of $1.1bn over two phases of the project, aimed at boosting Dakar's position as a major logistics hub and gateway to west and north-west Africa.
DP World recorded a 10.2 per cent increase in first-quarter container shipping volumes and anticipated delivering an improved performance in 2021, as the global economy recovers from the Covid-19 pandemic.
The ports operator handled 18.9 million TEUs in the first three months of 2021, up from 17.2m TEUs in the same quarter last year. All its regions recorded growth, led by the Americas and Australia, where volumes rose 17.7 per cent to 2.7m containers.
Global trade is set to improve after a rebound in the second half of last year due to pent-up demand for consumer durables from advanced economies such as cars and the resumption of supply chains in emerging markets, according to the International Monetary Fund. Trade is forecast to expand 8.4 per cent this year and 6.5 per cent next year after shrinking 8.5 per cent in 2020, according to the fund's estimates.