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CJ delivers a deal for DSC Logistics
Posted on Monday, 11 June 2018 12:21
CJ Logistics is acquiring 90.0 per cent of US third-party logistics provider and supply chain consultant, DSC Logistics, for KRW 231.42 billion (USD 215.16 million) by November this year to drive its geographical footprint across North America.
Through the purchase – carried out via wholly-owned subsidiary CJ Logistics USA – the South Korean parcel-to-forwarding company will get its hands on an existing customer base, global standard operating capacity and an established countrywide network and infrastructure.
It also has the option of picking up the 10.0 per cent balance in the future, depending on the company’s performance.
Founded in 1960 as Dry Storage, DSC Logistics had revenue of KRW 578.00 billion in fiscal 2017 (FY 2016: KRW 522.00 billion; FY 2015: KRW 434.00 billion).
The group had an operating margin of 1.9 per cent, 2.3 per cent and 1.8 per cent in FY 2017, FY 2016 and FY 2015, respectively.
DSC Logistics booked earnings before interest, tax, depreciation and amortisation (EBITDA) of KRW 21.00 billion in FY 2017 (FY 2016: KRW 22.00 billion; FY 2015: KRW 15.00 billion) and net profit of KRW 21.00 billion (FY 2016: KRW 11.00 billion; FY 2015: KRW 7.00 billion).
The business had a ratio of liabilities to equity of 116.0 per cent as at the end of December 2017, and a current ratio of 197.0 per cent.
CJ president, Keun Tae Park, commented: “Following our market expansion into China and Southeast Asia, we are pleased to join forces with DSC Logistics in the US.
“We look forward to combining our technical capabilities and network to create synergies and to become a market leader in US logistics, especially in the W&D (warehousing and distribution) space.”
A report by Mirae Asset Daewoo indicates the acquisition price corresponds to a multiple of 12x enterprise value to EBITDA in 2017.
The financial group noted this “looks appropriate, given the strong growth potential and profitability of the to-be-acquired firm.
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