Speculation over a sale has reached fever pitch – one rumoured buyer in particular is failing to fade away: Geodis.
But sources suggest that non-forwarding buyers are also interested in acquiring CEVA from its private equity owner, Apollo. However, a banking source in New York noted that private equity was unlikely to be interested, as it would be unable to refinance CEVA’s debt at much cheaper rates.
The fear for CEVA would be a break up of the business, something a company like Geodis, searching for network synergies, may look to do.
However, CEO Marie-Christine Lombard told The Loadstar last month Geodis’s main acquisition targets were in the US, China and Germany.
Renewed interest in CEVA, saddled with debt after its acquisition by Apollo, is thought to be sparked by its recent financial restructuring as well as improved results.
While refraining from comment on a possible sale, CEVA CEO Xavier Urbain told The Loadstar last month the “main focus” was to drive the restructure, “which is starting to deliver good returns”.
One source said he believed the CEVA management team would have to be a part of any deal.
“CEVA is a relationship company with business controlled by groups and individuals. If they were not treated well they would walk.”
Apollo was famously accused of “shafting CEVA’s staff”, a history that some believe would make finalising a sale difficult without the buy-in of management. Some former employees have been chasing Apollo in the courts.
“Without the teams, Apollo has got nothing to sell,” said one source.
Speculation mounted after XPO Logistics’ CEO Brad Jacobs told a conference that his acquisitive company was looking again at M&A activity after 18 months of integration. XPO was eyeing deals over $500m, in Europe and the US, particularly in contract logistics, he said. However, XPO declined to comment on speculation about CEVA.
In fact, The Loadstar could find no potential buyers that would comment on the rumours. These include CJ Korea Express, which said in April it was looking for acquisitive growth in Europe and the US. However, it began talks with Apollo over CEVA last year, but a deal failed to get off the table.
Another possible contender is Japan Post, which paid $5.1bn for Toll Holdings in 2015. However, it has found the integration of Toll challenging. In April it said it was to make another 1,700 staff redundant, after the merged company announced an annual net loss, Japan Post’s first in a decade, of $363m.
While the Japanese company may well be cash-rich, it might not have the appetite currently for another big integration.
In January, a banking source indicated that a Chinese buyer was close to making a deal with Apollo, at a price tag of $3bn, but nothing came of it.
Alessandro Pasetti, The Loadstar’s financial columnist, said: “CEVA can easily be bought by a major transport and logistics company such as Japan Post, which could afford multiple times CEVA’s take-out price these days. How much, though, depends on whether Apollo will be greedy or not.
“Given the value of its equity in the secondary market, and the amount of debt sitting on its balance sheet, any suitor would need to shell out at least $2bn to secure a deal.”
He added: “Competition could be fierce: the purchase would make a lot of sense for Kuehne + Nagel and, as it fits with its stated mission to grow inorganically, at a time when organic growth is more of an uphill struggle than a stroll.
“Denmark’s DSV, too, has greatly exceeded expectations in regard to the integration of UTi Worldwide – and how not to mention cash-rich but laggard DHL Global Forwarding?
“Most of these buyers could replace CEVA’s more expensive debt with cheaper funding, likely rendering any cash-funded deal accretive from day one.”