CEVA Logistics announced that it will purchase 100% of CMA CGM’s freight management activities, CMA CGM Log, for which it will pay in cash USD 105 million. Closing of the CMA CGM Log acquisition is expected in the second quarter of 2019 following completion of the Public Tender Offer by CMA CGM for CEVA.
CMA CGM Log expects to generate revenues of USD 630 million and an EBITDA of USD 16 million. The company has 1,200 employees in 32 countries via directly-owned entities and has cooperation agreements in 26 additional countries. CMA CGM Log has a significant presence in high growth markets including India, China, Australia and the US.
The integration of CMA CGM Log into CEVA Freight Management Business line is expected to significantly reinforce CEVA’s footprint in Ocean freight management with 170,000 additional controlled TEUs, addressing CEVA’s target to reach close to 1 million TEUs and enable expansion of its product offering in the field of Sea FCL (Full Container Load) and LCL (Less than Container Load), customs clearance, carrier haulage and air freight forwarding. The combination of CMA CGM Log and CEVA’s Freight Management Business is expected to result in significant cost synergies.
The acquisition is part of company’s 2021 strategic plan which also includes key levers to accelerate top-line growth and improve profitability. “With the support of our strategic partner CMA CGM, I am proud to open a new chapter for CEVA Logistics and announce that we can accelerate our transformation and turnaround action plan in the next three years and beyond. This can be achieved by a combination of our commercial and sales focus, cross selling with CMA CGM customers, our own productivity actions, the integration of CMA CGM Log within CEVA and sharing resources with CMA CGM in the field of procurement and administrative functions,” Xavier Urbain, CEO of CEVA Logistics, said.
CEVA will remain an independent and standalone listed company. This strategic partnership is aligned with CMA CGM’s strategy to offer end-to-end logistics solutions to its customers, pioneering the development of integrated logistics solutions, while retaining an arm’s length business relationship with CEVA.
Under the 2021 strategic plan, CEVA has a revenue target of USD 9 billion, reflecting a 5% average annual organic growth and the contribution of CMA CGM Log of USD 630 million. The upgraded 2021 management expectations on Adjusted EBITDA raised from USD 380 million to USD 470-490 million.