Danish logistics company DSV is interested in buying C.H. Robinson Worldwide's freight forwarding unit for $9 billion, according to Reuters.
The unit of Eden Prairie-based C.H. Robinson, which arranges international cargo transportation for corporations around the world, has has grown quickly, especially during the pandemic, and provided about 30% of the company's annual revenue of $23.1 billion last year.
The unit's revenue more than doubled to $6.7 billion in 2021, while income from operations grew 191% to $510 million.
DSV, which is looking to expand in North America, last week met with a small group of investors and said it would be interested in acquiring C.H. Robinson's global forwarding business, which would give it critical access to trans-Pacific ocean trade lanes, sources told Reuters this week.
DSV is familiar with doing large deals. It made a $4.1 billion acquisition last year for a logistics consulting company and a $4.7 billion deal in 2019 for a Basel, Switzerland-based freight airline.
DSV has more than 77,000 employees in 90 countries and annual revenue in 2021 of $29 billion.
"It is well-known in the market that M&A is an important part of the DSV strategy, and we have a fiduciary obligation towards our shareholders to monitor the market and play an active role in the continued consolidation of our industry," a spokesperson said in a statement. "As a part of this strategy we would review any potential opportunities, but are currently not aware of any divestment process at C.H. Robinson."
A C.H. Robinson spokesperson said Thursday it does not comment on rumors.
As part of a settlement with activist investor Ancora Holdings Group earlier this year, Robinson created a committee to "objectively assess value creation opportunities." Ancora also got two seats on the company's board of directors.
One of those new board members, Jay Winship, is chairman of the new committee, which also includes board Chairman Scott Anderson and Chief Executive Bob Biesterfeld.
A C.H. Robinson spokesperson said in an e-mail at that time: "Ancora is supportive of our team, our company and our strategy. We have had collaborative dialogue with Ancora regarding our business and its potential, and we look forward to maintaining an open dialogue with them as we do with all of our shareholders."
Ravi Shanker, an analyst with Morgan Stanley who follows C.H. Robinson, wrote about the deal in a note to investors Tuesday, acknowledging that a sale of the global forwarding business would be a departure from C.H. Robinson's long-term growth strategy. However, he added that the Ancora directors might have changed that dynamic.
"Breaking up the company and spinning/selling Forwarding could be one of the financial engineering solutions on the cards to try and quickly unlock value," Shanker wrote.
DSV is not interested in acquiring all of C.H. Robinson or its freight brokerage business, the sources told Reuters. Robinson also is the largest provider of truck brokerage services in the U.S. and is Minnesota's sixth-largest public company.
Shares of C.H. Robinson spiked up 6% on the reports Tuesday and another 12% on Wednesday, but are down 2% for the week and closed Friday at $99. Its shares, though, have held up better than most Minnesota public companies thus far in 2022, down 6% year to date. With a current market cap of $12.8 billion, it ranks among the top 15 public companies in Minnesota by that metric.
