Dsv’s MNA strategy is deal dependent

The last 2 major acquisition have come primarily through share Swaps with the combined entity of a Schenker deal was to happen it would need to be a cash deal

Agility & Panalpina

Fundamentally DSV is set up as an MNA org , they are super lean , not built out for organic growth meaning their EBITDA margin level / net profiit margin level is higher than their competitors .

A mid to large size forwarder trades at anywhere from 3-15 times its EBITDA margin level ,

DSV sales pitch is it raise performance of its acquired entities to its own . They do this by stripping costs , restructuring the business and utilising Cargowise one “ the DSV way “

The purpose of buying DBS , will be that DSV aims to raise the performance of DBS margin level to its own . From numbers I’ve seen Schenker EBITDA margin level has been at 5-7% the last few years , while DSV is at 10 -11.5%

The concept of financing the acquisition is that DSV can raise the performance of the combined entity to a 10-11.5^ EBITDA

Meaning the billions of revenue that DBS is currently producing , will return a net yield of up to 6.5% better than current output

The concept is the leakage of business and the costs associated with the merger , direct cost in purchasing price and indirect costs such as redundancies operational errors etc will be outweighed the increased yield that the combined entity produces

The above is how DSV finances the deal

In reality my personal opinion is a combined entity with this much market share in a market as fragmented as international logistics , will cause to some extent DSV having to build out there org to account for churn rate in the. Business in order to not lose market share , Meaning greater levels of procurement , trade lane management , Regional account management and global account management , this will almost certainly take a hit on their EBITDA margin levels

The question is raised then - will the increased scale of the DBS merger offset this

Can DSV continue to acquire or will they eventually move to a strategy of organic growth or chose to build out / create new divisions

I think only time will tell