STOCK EXCHANGE ANNOUNCEMENT NO. 317 FOR DSV A/S
JL-Fondet, through its wholly owned subsidiary Vesterhavet A/S ("JL-Fondet")
and DSV A/S ("DSV) establish joint ownership of the majority shareholding in
DFDS A/S ("DFDS")
Under the joint ownership, JL-Fondet and DSV will develop and increase the
revenue and profitability of the Ro-Ro shipping services, the core area of
DFDS, and continue the agreed streamlining in the other business areas.
The transaction will make JL-Fondet a new significant shareholder of DSV with a
5.51% shareholding.
Main elements
• Today, JL-Fondet and DSV have concluded a conditional agreement on joint
ownership of a controlling interest of approx. 56% of the share capital and
voting rights in DFDS, a listed shipowning company owned so far by JL-Fondet
• DFDS will become jointly owned through Vesterhavet-DSV Holding A/S, a newly
founded company of which JL-Fondet owns 55% and DSV owns 45%. Under the
Shareholders' Agreement concluded today, the parties will have equal voting
rights in the new holding company
• The joint ownership structure will be established through an exchange of
shares, which implies an exchange of 45% of the shares in Vesterhavet-DSV
Holding A/S with new shares in DSV according to an exchange ratio between the
underlying shares in DFDS and the new shares in DSV of 1:5.5, which means that
DSV will pay JL-Fondet 5.5 DSV shares for each DFDS share of which DSV will
become the indirect owner
• In connection with the exchange of shares, 11,083,724 new shares in DSV will
be placed directly with JL-Fondet, corresponding to 5.51% of the nominal share
capital of DSV
• DFDS will remain listed on the stock exchange, and no bid will be made in
connection with the transaction as no change of control will occur according to
the securities law
• The Supervisory Board of DSV has decided to make the requisite capital
increase according to the powers granted in the Articles of Association,
however the completion of the capital increase, including the subscription for
and issue of new shares, as well as admission of the shares for trading and
listing on the NASDAQ OMX Copenhagen Stock Exchange and all other elements of
the transaction are subject to approval by the competition authorities, which
approval is expected in the first quarter of 2009
• Under the joint ownership, JL-Fondet and DSV will develop and increase the
revenue and profitability of the Ro-Ro shipping services, the core area of
DFDS, and continue the agreed streamlining in the other business areas
• The transaction will strengthen the existing customer relations between DSV
and DFDS concerning the use of the sea freight routes of DFDS for the road
activities of DSV
• The parties want to support, to the extent possible, the opportunities of
DFDS for taking part in the continued consolidation of its industry
• Together, DFDS and DSV will be able to develop and better utilise the RoRo
network of DFDS, particularly in full and part loads, thereby increasing the
freight volumes of both DFDS and DSV. That would shift large volumes from
motorways to ships, which is a more expedient production method from an
industrial and environmental perspective
• Following completion of the transaction, the parties intend to suggest a
revision of the DFDS dividend policy, the main purpose being to raise total
payments to the shareholders. It is contemplated to distribute cash not spent
on reduction of debt or investments, including the acquisition of other
enterprises, as dividends or to effect share buy-backs for an amount
corresponding to two thirds of the net profit of the year.
• As a new significant shareholder of DSV, JL-Fondet will pursue long-term
value creation
Comments from Bent Østergaard, CEO of Vesterhavet A/S:
"Together with DSV, we want to support the vision of the Executive Board of
DFDS to expand the leading position of DFDS in sea freight in Northern Europe.
We share the aim of achieving profitable growth in RoRo activities and an
improvement of the other business areas of DFDS. The position and staff of DFDS
constitute a solid base for success. The transport industry experience of DSV
combined with its comprehensive experience of mergers and acquisitions and
successful integration make DSV the right fellow shareholder for the continued
development of DFDS."
Comments from Jens Bjørn Andersen, CEO of DSV:
"DFDS is a company having strong routes and talented employees. We look forward
to assuming responsibility for taking DFDS even further so that we and the
other shareholders will have a satisfactory return on our investment. At the
same time I obviously welcome Vesterhavet A/S as a new shareholder of DSV. I
look forward to collaborating in that respect as well."
Reason for the transaction
The fact that DSV owns part of DFDS will strengthen the strategic position and
operational development of DFDS. DSV has global competencies in the transport
industry that supplement the existing competencies of DFDS. By having DSV as an
active co-owner of DFDS, the parties expect that the strategic and operational
targets of DFDS will be met faster.
DSV's co-ownership is expected to contribute both to ever higher revenue of
DFDS and to continued improvement of the profitability of the shipping company
through cost-reducing initiatives.
Presently there is a comprehensive consolidation ongoing in the Northern
European transport industry. Just like the DFDS management, the parties want
DFDS to play a prominent role in this process. The prospects of DFDS for taking
active part in the consolidation will improve with DSV as one of its
shareholders.
Together, DFDS and DSV will be able to develop and better utilise the Ro-Ro
network of DFDS, particularly in full and part loads, thereby increasing the
freight volumes of both DFDS and DSV. That would shift large volumes from
motorways to ships, which is a more expedient production method from an
industrial and environmental perspective.
No plans have been made to integrate the businesses of DFDS and DSV. Being the
largest customer of DFDS, DSV today uses the sea freight routes of DFDS in the
North and Baltic Seas for its road activities. This customer relationship will
be strengthened through this co-ownership. The parties also intend to seek
optimisation of the operation and activities of the administrative functions of
DFDS.
Management and future strategy
According to the Shareholders' Agreement signed today, DSV and JL-Fondet will
each appoint three members for the Supervisory Board of Vesterhavet-DSV Holding
A/S, who will also be nominated for the Board of Directors of DFDS. The parties
have agreed to appoint alternating chairmen of the Supervisory Board of
Vesterhavet-DSV Holding A/S for two-year terms, who will also be nominated for
the position of chairman of DFDS. JL-Fondet expects to nominate Jill Lauritzen
Melby, Ingar Skaug and Bent Østergaard for the supervisory boards of
Vesterhavet-DSV Holding A/S and DFDS, and DSV expects to nominate Kurt K.
Larsen, Jens Bjørn Andersen and Jens H. Lund for the two supervisory boards and
Kurt K. Larsen for the position of chairman.
It is not expected that the transaction will give rise to any replacements on
the Executive Board of DFDS, which will continue to play a pivotal part in the
continued development of DFDS.
During the months following the transaction, DSV and JL-Fondet intend to make a
detailed plan together with the Executive Board of DFDS of the initiatives that
the parties want to effect together in respect of DFDS. At present, the parties
agree on continued development of and investment in Ro-Ro shipping, the core
activity of DFDS, which has a history of solid returns on invested capital.
The passenger shipping activities and other existing activities will be adapted
to the current market situation to achieve an acceptable ROIC within the
foreseeable future.
The parties have stipulated a goal of a minimum ROIC of 12% for the business
areas and activities of DFDS.
Following completion of the transaction, the parties intend to suggest a
revision of the DFDS dividend policy, the main purpose being to raise total
payments to the shareholders. It is contemplated to distribute cash not spent
on reduction of debt or investments, including the acquisition of other
enterprises, as dividends or to effect share buy-backs for an amount
corresponding to two thirds of the net profit of the year.
The transaction
As a consequence of the transaction, DSV will become shareholder of DFDS. The
parties have agreed that DSV will purchase 45% of the shares in Vesterhavet-DSV
Holding A/S, a newly founded limited liability company which will hold all the
4,476,656 shares in DFDS held by JL-Fondet so far. This shareholding
corresponds to a stake in the company and voting rights of 55.96%. The parties
have concluded a Shareholders' Agreement giving them equal voting rights in
Vesterhavet-DSV Holding A/S, which will become the new majority shareholder of
DFDS.
The consideration for the shares in Vesterhavet-DSV Holding A/S is paid
exclusively by means of new shares issued by DSV for direct placement with
JL-Fondet. The parties have agreed on an exchange ratio between the underlying
shares in DFDS and the new shares in DSV of 1 to 5.5, which means that DSV will
pay JL-Fondet DSV 5.5 shares for each share in DFDS of which DSV will become
the indirect owner. The aggregate issue comprises 11,083,724 new shares in DSV
subscribed for by JL-Fondet at the market price without any pre-emptive rights
for existing shareholders of DSV. The subscription price of the new shares in
DSV is based on a share price of DKK 390 for the DFDS share on the NASDAQ OMX
Copenhagen Stock Exchange and the agreed exchange ratio of 1 to 5.5 and has
been fixed at DKK 71 per share of a nominal value of DKK 1.
The Supervisory Board of DSV has decided to make the requisite capital increase
according to the powers granted in the Articles of Association, however the
subscription for the new shares and the subsequent admission of the shares for
trading and listing on the NASDAQ OMX Copenhagen Stock Exchange are subject to
approval of the transaction by the competition authorities. The competition
authorities are expected to approve the transaction in the first quarter of
2009.
As a new significant shareholder of DSV, JL-Fondet will pursue long-term value
creation.
DFDS will remain listed on the stock exchange, and no bid will be made in
connection with the transaction because no change of control will occur
triggering a mandatory bid for the rest of the shares.
So far, JL-Fondet has held its shares in DFDS indirectly through its wholly
owned subsidiary Vesterhavet A/S, and similarly, it will hold its shares in
Vesterhavet-DSV Holding A/S indirectly through Vesterhavet A/S. JL-Fondet may
opt at
any time to hold its shares in Vesterhavet-DSV Holding A/S directly by taking
over the shares of Vesterhavet A/S in Vesterhavet-DSV Holding A/S.
Danske Markets Corporate Finance serves as the exclusive financial adviser of
JL-Fondet and DSV in connection with the transaction.
Accounting effect
The shares in Vesterhavet-DSV Holding A/S will become recognised in the
consolidated financial statements of DSV when the transaction has been finally
approved by the relevant authorities. The investment will be recognised in the
consolidated financial statements of DSV using the equity method, that is, in
one line in the income statement and in one line under assets. As a consequence
of the new shares to be issued to JL-Fondet as consideration, the DSV share
capital will increase by DKK 11,083,724 from DKK 190,150,000 to DKK
201,233,724, resulting in a share premium which will be determined once the
subscription of the new shares has taken place. The share premium is
distributable equity.
This announcement has been forwarded to the NASDAQ OMX Copenhagen Stock
Exchange and to the press. It is also available on www.dsv.com. The
announcement has been prepared in Danish and in English.
Contact persons tel.
JL-Fondet/Vesterhavet
Niels Fisch-Thomsen, Chairman of JL-Fondet +45 33 12 72 30
Bent Østergaard, CEO of Vesterhavet A/S +45 33 96 84 30
DSV
Kurt K. Larsen, Chairman of the Supervisory Board +45 40 55 82 11
Jens Bjørn Andersen, CEO +45 43 20 40 60
Yours sincerely,
JL-Fondet/Vesterhavet and DSV
Bent Østergaard Niels Fisch-Thomsen Kurt K. Larsen Jens Bjørn Andersen
CEO Chairman of the Supervisory Board Chairman of the Supervisory Board CEO
Vesterhavet A/S JL-Fondet DSV DSV