SembCorp takes stake in Kuehne & Nagel
Financial Times; Nov 28, 2000
By WILLIAM HALL
SembCorp Logistics, a fast-growing Singapore-based logistics company, is paying SFr612m (Dollars 344m) for a 20 per cent stake in Kuehne & Nagel, one of the world’s biggest freight forwarding companies.
The two companies have signed a strategic alliance that will give the Singapore company access to the Swiss group’s network of over 500 offices in 85 countries. In return Kuehne & Nagel will considerably strengthen its position in Asia and will gain access to SembCorp’s supply chain activities in Singapore, China, India and other Asian Pacific markets.
Klaus Helms, Kuehne & Nagel chief executive, said that these markets were growing at more than 20 per cent a year and “getting more direct access to them is an important strategic objective for us”.
Kuehne & Nagel, the world’s biggest ocean freight forwarder and one of the leading air freight forwarders, is regarded as one of the best-managed companies in the industry. However, it has been struggling to change from a traditional freight forwarder into a global logistic services provider.
There has been considerable consolidation in Europe’s fragmented logistics industry over the last couple of years as companies such as Deutsche Post, have responded to the growing demand for integrated worldwide logistics solutions.
SembCorp is paying SFr1,275 per share, a 24 per cent premium to Kuehne & Nagel’s share price, for its stake in a family-controlled company that is among Europe’s top three transport and logistics groups.
Kuehne & Nagel will issue 400,000 new shares and Klaus-Michael Kuehne, who controls the company, will sell 80,000 shares. Kuehne & Nagel shares closed 4.3 per cent higher at SFr1,070 yesterday.
Kuehne & Nagel is buying a 5 per cent stake in SembCorp Logistics, a company less than a quarter of its size, and has an option to acquire an additional 15 per cent stake.
Mr Kuehne said that the money raised from the sale of the 20 per cent stake would finance the expansion of the group’s US operations. SembCorp will have two directors on the Kuehne & Nagel board and Kuehne & Nagel will have one director on the SembCorp board.
The companies said the alliance significantly accelerates the growth strategies of both companies. The benefits include increased penetration of the joint customer base, faster development of technology and increased financial capacity to accelerate developments in US and Asia-Pacific supply chain management.
