US-BASED UTi Worldwide has revealed that a lack of
forwarding growth and a soft market were among the key factors that encouraged
the board of the company to accept a US$1.35 billion acquisition offer
from Danish
logistics group, DSV.
In a note to
employees explaining the company's latest statements filed to the US
Securities and Exchange Commission (SEC), CEO Ed Feitzinger praised
staff for their efforts. But he explained that the market conditions and
outlook meant that the company had missed its third-quarter earnings targets
and its projected future results - excluding the improvements within the
group's contract logistics and Distribution business (CL&D) - were
likely to be much lower than originally forecast, Lloyd's Loading List
reported.
"We are
pleased that the acquisition process is moving along as expected so far, and we
expect to complete the steps necessary for a vote on the merger before the end
of the first quarter of calendar 2016. As I have said before, the great work
each of you do every day is what made us an attractive merger partner for DSV.
"However,
as we saw in our Q2 earnings, the forwarding market has been much softer than
we expected, and we faced a scale problem in forwarding as a result. You'll see
from the projections published in the 'Preliminary Proxy Statement' that we
expected this situation to continue.
"While
we have shown modest growth in air forwarding, it has not been enough to offset
our scale challenges. The combination of a lack of forwarding growth and a soft
market meant our results going forward - CL&D improvement aside - were
likely to be much lower than originally forecasted. This outlook was one of the
many factors that prompted our Board to approve the transaction with DSV".
Source :
HKSG.
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