UTi Worldwide says it is not for sale

Non asset-based third-party logistics (3PL) services provider UTi Worldwide (UTIW) issued a statement yesterday shooting down speculation that it will be acquired by DSV A/S, a Denmark-based global supplier of transport and logistics services.

UTIW’s statement was issued in response to a Bloomberg report published on December 3.

The report indicated that UTIW was in “advanced talks to sell itself to DSV A/S” and has been in sale discussions since mid-2014 and was possibly reaching an agreement as soon as this month, according to people whom declined to be identified, the report said.

“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’s statement explained. “Currently there are no discussions taking place between the companies.”

Bloomberg reported that UTi has lost about one-quarter of its market value since disclosing on Feb. 25 that it had breached some loan covenants. It added that the company issued new debt, as well as convertible preferred shares to P2 Capital to fix the liquidity crunch, with now P2 UTi’s biggest investor. UTi hired Morgan Stanley a few months ago to explore options including a sale, the report added.

With a key focus on its services as a non-asset-based freight forwarder, including customs brokerage, warehousing services, Bloomberg said that air and ocean freight forwarding were UTIW’s biggest businesses in the 2014 fiscal year, accounting for about 59 percent of its $4.4 billion in revenue.

Stifel Nicolaus analyst David Ross wrote in a research note that both companies confirmed discussions of a deal had occurred, he said that that UTIW may, or may not, be moving down the sale path with another suitor.

“But, with the rollout of its 1View (freight forwarding) system for global freight forwarding largely complete and margin expansion ahead, we believe UTi’s results should continue to improve,” Ross wrote. “We further believe that, in this hot M&A market, UTi s an attractive asset to anyone looking to establish a global presence in freight forwarding and/or contract logistics, as UTi is one of the few top-15 forwarders for sale, has a footprint in the U.S. as well as links from the U.S. to other major markets, and has significant margin expansion potential.”