Logistics

DP World to acquire Australia’s Silk Logistics

November 11, 2024, 3:47 PM

DP World Australia operates four container ports and is taking on more than 40 Silk Logistics sites

Deal worth A$174.5m
Silk shares up 40%
Board unanimously in favour

DP World Australia has announced plans to acquire the freight and logistics service provider Silk Logistics Holdings, in a deal worth A$174.5 million ($114.9 million).

The Australian subsidiary of Dubai’s DP World will buy Silk Logistics at a price of A$2.14 ($1.40) per share.

The transaction is subject to shareholder approval and regulatory approvals, and is expected to be completed in the first half of 2025.

Shares in Silk Logistics rose more than 40 percent on the news. The company offers port-to-door logistics services for consumer goods, light industrial, food, specialised retail and containerised agriculture.

It operates 21 logistics hubs and 25 warehousing sites across five Australian states.

It has two main business segments: port logistics, offering services between Australia’s major ports, and contract logistics, which provides warehousing.

DP World Australia operates four container terminals and three container parks in Brisbane, Sydney, Melbourne and Fremantle, as well as inland distribution centres and warehouses.

Its parent company, DP World, handles approximately 10 percent of global containerised trade.

Sultan bin Sulayem, DP World’s group chairman and chief executive, said the acquisition would strengthen the company’s integrated logistics capabilities: “This strategic move reinforces our commitment to providing seamless, end-to-end customised solutions for our customers, while delivering sustainable value for all our stakeholders.”

Silk Logistics’ board has unanimously recommended that shareholders vote in favour of the deal.

Its CEO, John Sood, said the transaction “recognises the significant investment that Silk has made into its national integrated port-to-door service offering, extensive capabilities and the strong relationships we have built with our dedicated customer base”.

Last month DP World announced plans to invest $1.3 billion in the expansion of its London Gateway port, with a plan to make it the UK’s largest within five years.

The investment almost did not go ahead after the UK’s transport secretary, Louise Haigh, referred to P&O Ferries, which is owned by DP World, as a “rogue operator”.

In August DP World announced a 60 percent fall in half-year profits, linked to the Red Sea disruption.

Profit attributable to owners fell to $265 million in the first six months from $651 million a year earlier, the company said. However, revenues were up 3.3 percent to $9.34 billion, from $9.04 billion a year ago.

In Australia and the Americas, its ports and terminals delivered a strong performance, particularly in the Americas, where gross container volumes grew 18.3 percent.