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Shares in Silk Logistics Holdings (ASX: SLH) surged more than 40 per cent this morning after DP World Australia launched a $174.5 million takeover offer for the port-to-door logistics group.
DP World, a Dubai-based company that has a long history in the Australian ports sector stretching as far back as the late 1960s when it was part of the Peninsular & Oriental Steam Navigation Company (P&O), is offering a premium of more than $54 million to last Friday’s closing price to secure full control of Silk Logistics.
Silk shares shot to a high of $2.09, or 42 per cent, at the open this morning - just shy of the offer price which has been unanimously recommended to shareholders by the Silk board.
“The board has carefully considered the proposal from DP World Australia and believes it represents compelling value for the company and an attractive outcome for Silk shareholders,” says Silk Logistics chair Terry Sinclair.
Although the offer is still subject to shareholder and regulatory approval, some 46 per cent of shares held by key investors in Silk, including CEO John Sood, are poised to vote in favour of the buyout which DP Australia says will bolster its logistics services in the Oceania region.
“The proposed transaction recognises the significant investment that Silk has made into its national integrated port-to-door service offering, extensive capabilities and the strong relationships we have built with our dedicated customer base,” says Sood.
“With the benefit of DP World Australia’s infrastructure combined with Silk’s landside expertise, Silk will continue to focus on providing the highest quality services to its customers.
“We see strong strategic and cultural alignment between Silk and DP World Australia and we look forward to working together to achieve our shared goals.”
DP World is a major global operator that accounts for an estimated 10 per cent of global container traffic with its operations covering freight-forwarding services, contract logistics and maritime services. The group has 78 port terminal operations globally – among them Brisbane, Sydney, Melbourne and Fremantle in Australia.
“DP World Australia is excited about the opportunity to welcome Silk into our portfolio,” says DP World’s Asia-Pacific CEO Glen Hilton.
“This acquisition aligns with our strategy to deliver complementary logistics solutions for a broad customer base across Oceania.
“Combining DP World Australia’s terminal operations with Silk’s value add services enhances our capability to deliver enhanced solutions for customers and to create sustainable value for all stakeholders.”
DP World was established in 2005 through the merger of Dubai Ports Authority and Dubai Ports International, with the group estimated to handle about 70 million containers from about 70,000 ships a year globally. The company is said to account for about 40 per cent of Australia's imports and exports.
The takeover proposal follows a robust performance by Silk Logistics in FY24 in the face of economic headwinds.
Silk Logistics reported a 13.9 per cent increase in revenue to $556.4 million last financial year, leading to an 11 per cent lift in underlying EBITDA to $95.4 million.
Silk’s revenue growth was aided by the acquisition of Secon Freight Logistics in September last year, expanding the group’s capabilities into bulk logistics.
Subject to all conditions being met, including shareholder approval, the buyout deal is expected to settle in the third quarter of FY25.
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