DFDS expands to the Mediterranean Sea
DFDS are taking over U.N. Ro-Ro, the leading Turkish operator of freight routes in the Mediterranean Sea, which connects Turkey with Italy and France. U.N. Ro-Ro is a highly profitable company with a market share of twice as much as the closest competitor in Turkey.
"With the acquisition of U.N. Ro-Ro, we are expanding to one of Europe's most attractive freight markets, which is similar to northern Europe as far as operation. This allows us to join the strong management of U.N. Ro-Ro's to utilize our network, fleet, experience and skills to further develop the business while supporting U.N. Ro-Ro's customer’s growth, "says Niels Smedegaard, CEO of DFDS.
DFDS has today entered a deal of purchasing 98.8 percent of U.N. Ro-Ro, Turkey's largest operator of freight routes between EU and Turkey, from the Turkish private equity companies Actera Group and Esas Holdings. DFDS’ purchase of U.N. Ro-Ro is based on a value of 7.1 billion Danish kroner on a debt-free basis, which is mainly financed through binding debt financing.
The acquisition is expected to increase DFDS 'revenues already as of 2018. The financing, which includes an expected stock issue of approximately 5 percent of the share capital, is structured to keep DFDS' flexibility in balance. The acquisition increases earnings from the first year.
To close the deal, the transaction needs to be approved by the Turkish, Austrian and German competition authorities as well as Italian authorities in connection with the transfer of the Trieste terminal as a strategic asset. The transaction is expected to be finalized in June 2018.
U.N. Ro-Ro operates five freight routes in the Mediterranean Sea between Turkey and the EU. The company has four routes to Italy and one to France. The routes transported 202,000 freight units in 2017, which makes up 34 percent of the total market including land transport.
By the end of 2017, U.N. Ro-Ro were in charge of operating 12 cargo ships, all an average age of 11 years. All ships are built on the Flensburg shipyard, where some of DFDS 'most modern and efficient Ro-Ro ships are also built.
In addition to this, U.N. Ro-Ro operates two port terminals and delivers intermodal solutions. Revenue for 2018 is expected to be 240 million Euro and for EBITDA 97 million Euro is expected in revenues. The company has 500 employees.
DFDS believes that the acquisition of U.N. Ro-Ro will provide a significant value to customers, employees and shareholders. In connection to the acquisition, DFDS will therefore shut down the current share buyback program and suspends dividend of 2018.
The acquisition exspands DFDS 'route network to include the rapidly expanding transport market between Turkey and the EU. U.N. Ro-Ro's business model for transportation of unaccompanied freight units, primarily trailers, on ro-ro ships between Turkey and the EU, is identical to DFDS 'business model in the North Sea.
Furthermore, the integration of U.N. Ro-Ro in DFDS 'business model and systems is expected to provide a range of synergies and development opportunities. This applies to extended service offers to both existing and potential customers from both companies.