M&A Qualitative Case Study – The Best Acquisition for DSV A/S – 30 Minutes

You have 30 minutes to review the information below and present your findings. You don’t
have to write detailed responses, but it will help to take notes, make a rough outline, and note
the key financial figures.
Your bank, Goldman Stanley, has been appointed to negotiate a buy-side M&A deal for DSV
A/S, a European transportation and logistics services company headquartered in Denmark.
The company is considering four different acquisition candidates:

 STEF SA – Another European transportation and logistics firm, headquartered in France.

 Universal Logistics Holdings, Inc. – A U.S.-based transportation and logistics company.

 Kerry Logistics Network Limited – An Asian logistics services company in Hong Kong.

 CAR Inc. – A car rental company based in Beijing.

Review DSV’s strategy and long-term goals, the description for each potential target company,
and the financial information in the provided Excel file.
Based on that information, prepare to answer the following questions:
1) Of these four companies, which one is the best for DSV to acquire? What financial and
strategic reasons justify your choice?

2) What purchase consideration do you recommend for this deal?

3) Will the deal be accretive or dilutive? How can you estimate this without having the
full financial information for each company?

4) If you had more time to make a decision, what additional information would you
request?

DSV’s Strategy and Long-Term Goals:

Currently, DSV is the world’s fourth-largest freight forwarder. The company earned 62.7 billion
DKK in revenue in the LTM period, with 3.9 billion of EBITDA and 1.6 billion of Net Income.

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As an asset-light provider, the company owns no ships or airplanes and instead acts as a
“broker” between companies and transportation contractors.
The market is highly fragmented, with the top 10 global providers having a combined market
share of only 35% (DSV’s market share is ~3%).
Approximately 27% of its revenue came from the Nordic countries, 15% from Southern Europe,
38% from Other Europe/EMEA, 10% from the Americas, and 10% from APAC.
DSV’s Air & Sea division contributed 42% of its revenue, its Road division contributed 47%, and
its Solutions division was responsible for 11% of its revenue.
The company recently acquired UTi Worldwide, a global, asset-light supply chain and logistics
provider headquartered in the U.S. UTi is strong in North America and South Africa.
DSV has indicated the following financial and strategic goals:

 EBITDA Margin: The company is targeting at least an 8% EBITDA margin in coming years.

 Debt / EBITDA: The company is targeting a range of 1.0x – 1.5x. The maximum Debt /
EBITDA ratio the company will accept is 5.0x.

 Growth: The company plans to grow organically and via acquisitions, and it’s aiming to
grow at a rate above the 3% projected market growth rate.

 Industry and Geographic Criteria for Acquisition Targets: The company wants to remain
asset-light and increase its exposure to markets outside of Europe.

 Dilution: The company will accept no more than 25% dilution in an M&A deal.
The company’s financial projections, Equity Value, Enterprise Value, valuation multiples, and
credit stats and ratios are shown in the attached Excel file.
Description of Acquisition Candidate #1 – STEF SA
STEF SA is a European leader in cold logistics (-25°C to +18°C). It provides transportation and
logistics for all temperature-sensitive and agricultural food products.
The company’s clients consist of food companies, manufacturers, retailers, and out-of-home
foodservice outlets.

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STEF employs 15,590 staff members in 7 European countries (Belgium, Spain, France, Italy, the
Netherlands, Portugal, and Switzerland).
The company also owns 219 platforms and warehouses, 1,950 refrigerated trailers, and 1,900
vehicles.
The company was founded in 1920 and is headquartered in Paris. You can find its financial
information in the attached Excel file.
Description of Acquisition Candidate #2 – Universal Logistics Holdings, Inc.
Universal Logistics Holdings, Inc. is a leading asset-light provider of customized transportation
and logistics solutions throughout the United States, Mexico, Colombia, and Canada.
The company serves its customers across the entire supply chain, including with transportation,
value-added, intermodal, air, ocean and customs brokerage services.
It serves the automotive, steel, oil and gas, alternative energy, and manufacturing industries, as
well as other transportation companies who aggregate loads from various shippers.
The company was founded in 1981 and is headquartered in Warren, Michigan. You can find its
financial information in the attached Excel file.
Description of Acquisition Candidate #3 – Kerry Logistics Network Limited
Kerry Logistics is Asia's leading logistics service provider, with extensive operations in Greater
China and the ASEAN region. Its core businesses encompass integrated logistics, international
freight forwarding, and supply chain solutions.
Approximately 82% of the company’s revenue comes from Asia, and it is one of the fastest-
growing listed logistics companies in the world.
Unlike most other logistics providers, Kerry Logistics owns its assets and operates 45 million
square feet of logistics facilities, as well as a unique cross-border transportation network (KART)
that connects the ASEAN countries and China.
Kerry Logistics Network Limited was founded in 1981 and is headquartered in Hong Kong. You
can find its financial information in the attached Excel file.
Description of Acquisition Candidate #4 – CAR Inc.
CAR Inc. is the largest car rental company in China, with a fleet larger than the combined fleet
of the #2-20 car rental companies in the country.

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The company has direct operations in over 70 Chinese cities, with a franchisee presence in 200+
lower-tier cities.
The company’s fleet consists of over 91,000 vehicles, and it has a network of 900+ service
locations in China.
In addition to car rentals, the company provides value-added services such as 24/7 roadside
assistance, auto insurance, and vehicle delivery; it also sells auto parts, used cars, and vehicle
parking management services.
CAR Inc. was founded in 2007 and is headquartered in Beijing. You can find its financial
information in the attached Excel file.

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