Silk Logistics shareholders back $175m DP World buyout in major Oceania expansion

Silk Logistics (ASX: SLH) is set to be acquired by DP World Australia in a $175 million deal, aiming to expand logistics offerings to a broader customer base across Oceania.

Under the terms of a scheme implementation deed, DP World will pay Silk shareholders a cash consideration of $2.14 per share, representing a 45.6% premium to the last closing price and a 60.6% premium to Silk’s one-month volume-weighted average price.

Silk Logistics will be subject to customary exclusivity obligations during the transaction period, with a break fee payable to DP World under certain circumstances.

Board support

Silk’s board of directors has confirmed it will vote in favour of the scheme and has unanimously recommended shareholders do the same.

Major shareholders Tor Asia Credit Master Fund (18.7% equity), Karma Beverages (13.18%), JAS Logistics Consulting (0.3%) and BBJJ Investments (13.30%) – which collectively hold about 46% of Silk’s ordinary shares – have also expressed their intention to support the deal.

Karma and JAS are associated with Silk chief executive officer John Sood, while BBJJ is linked to director Brendan Boyd.

Silk has appointed Barrenjoey Capital Partners as its financial adviser and Hamilton Locke as its legal adviser for the transaction.

Important milestone

Silk CEO John Sood described the DP takeover as an “important and exciting” development in the company’s history.

“This proposed transaction recognises the significant investment Silk has made in its national integrated port-to-door service offering, extensive capabilities and the strong relationships we have built with our dedicated customer base,” he said.

“With DP World’s infrastructure, we will continue to focus on delivering the highest quality services.”

“We see strong strategic and cultural alignment with DP World Australia and look forward to working together to achieve our shared goals.”

Strategic fit

DP World Asia Pacific managing director Glen Hilton expressed enthusiasm for adding Silk to the company’s portfolio.

“This acquisition aligns with our strategy to deliver complementary logistics solutions across Oceania,” he said.

“Combining our terminal operations with Silk’s value-add services will enhance our capability to deliver improved solutions for customers and create sustainable value for all stakeholders.”