DP World to purchase South Africa’s Imperial Logistics for $890m

DP World, one of the largest port operators globally, plans to buy South Africa’s Imperial Logistics for $890 million, strengthening its presence in the world’s second-largest continent.

Imperial Logistics, listed in Johannesburg, is a market access company with operations in Africa and Europe.

“The acquisition of Imperial will help DP World to build better and more efficient supply chains for the owners of cargo, especially in Africa,” said Sultan bin Sulayem, group chairman and chief executive of DP World. “Imperial’s operations are complementary to our network of ports, terminals and logistics operations on the continent.”

The deal, to be funded from DP World’s available resources, is expected to close by the first quarter of 2022.

DP World’s cash offer of 66 South African rand per share implies an equity consideration of around 12.7 billion rand ($890m) and represents a premium of 39.5 per cent to the Imperial share price as of July 7 on the Johannesburg Stock Exchange.

It is a 34.2 per cent premium to the 30-day volume weighted average price.

However, the transaction is subject to Imperial’s shareholder approval and other customary completion conditions including regulatory approvals.

With a focus on fast-growing industries including healthcare, consumer, automotive, chemicals, industrial and commodities, Imperial has a presence across 25 countries, including a significant footprint in the high growth Africa market.

The ports operator said its acquisition of Imperial will add new capabilities to DP World, particularly in Africa as it aims to improve connectivity between African producers along fast-growing trade lanes to the rest of the world.

The move builds on DP World’s significant expansion across the African continent in recent years with its investments in sea ports, terminals and logistics services as it seeks to tap into lucrative trade routes in the region.

Its existing investments in Africa include projects in Egypt, Algeria, Djibouti, Rwanda, Somaliland, Mozambique and Senegal, according to the company’s website.

Earlier this month, DP World acquired US logistics operator Syncreon for a total enterprise value of $1.2bn.

Syncreon specialises in the design and operation of complex supply chains for the highgrowth automotive and technology industries.

Last month, DP World said it opened a new container terminal at Berbera Port in Somaliland, with work under way to further expand the terminal’s capacity and develop it into a major regional trade hub serving the Horn of Africa.

The newly opened terminal increases the port’s container capacity from the current 150,000 Twenty Foot Equivalent Units (TEUs) to 500,000 TEUs annually.

In May, the Dubai ports operator said it will start development of a greenfield deepwater port in the Democratic Republic of Congo, following amendments to the initial contract between the company and the government. In March 2018, DP World was awarded a 30year concession to develop and manage the $1bn Banana Port along the DRC’s Atlantic coast in a joint venture with the government.

The ports operator also launched an e-commerce platform, Dubuy.com, in April to increase trade with Africa and boost the reach of companies from the UAE and world to the continent.

Last year, the ports operator signed an agreement with Senegal to develop its Ndayane deep-water port, making it the company’s biggest port investment in Africa at that time.

DP World Dakar said it will invest a total of $1.1bn over two phases of the project, aimed at boosting Dakar’s position as a major logistics hub and gateway to west and north-west Africa.

DP World recorded a 10.2 per cent increase in first-quarter container shipping volumes and anticipated delivering an improved performance in 2021 as the global economy recovers from the Covid-19 pandemic.

The ports operator handled 18.9 million TEUs in the first three months of 2021, up from 17.2 million TEUs in the same quarter last year.

All of its regions recorded growth, led by the Americas and Australia, where volumes rose 17.7 per cent to 2.7 million containers.

Global trade is set to improve after a rebound in the second half of last year owing to pentup demand for consumer durables from advanced economies such as cars and the resumption of supply chains in emerging markets, according to the International Monetary Fund.

Trade is forecast to expand 8.4 per cent this year and 6.5 per cent next year after shrinking 8.5 per cent in 2020, according to the fund’s estimates.

All of DP World’s regions recorded growth, led by the Americas and Australia, where volumes rose 17.7%