CEVA Logistics will strengthen its relationship with CMA CGM as part of its revised strategic plan by launching a strategic partnership with CMA CGM and accelerating turnaround efforts with the support of CMA CGM’s corporate transformation expertise, leveraging CMA CGM’s overall platform to accelerate revenue growth, and acquiring CMA CGM’s freight management arm CMA CGM Log.
Nicolas Sartini has been appointed as chief operating officer and deputy CEO of CEVA from January 1, 2019. He has been acting as CEO of APL since CMA CGM’s takeover of APL in June 2016 and previously held various positions within CMA CGM including group senior vice president.
“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,” said Xavier Urbain, CEO of CEVA Logistics. “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. I am very happy to welcome Nicolas who has successfully turned around the APL shipping company as my deputy and COO.”
According to CEVA, the 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.
CEVA expects to introduce value-enhancing initiatives such as cross-selling with CMA CGM, diversifying to small and medium-size customers, focusing on segments like cold chain logistics and LCL shipments, developing fast-growing sectors like e-commerce and retail, improving operators’ productivity with process improvements and technology, and accelerating the deployment of IT tools.
In terms of efficiency improvements, back-office function synergies have been already identified, including savings on current outsourcing contracts, transfer of functions to shared service centres and more efficient billing and cash collection.
CEVA has agreed in principle to fully acquire CMA CGM Log for US$105 million in cash, subject to regulatory approvals, confirmatory due diligence and legally required consultation processes. The transaction is expected to close in the second quarter of 2019.
CMA CGM Log expects to generate revenues of US$630 million and an EBITDA of US$16 million. The company has 1,200 employees in 32 countries through 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’s freight management business is expected to reinforce CEVA’s footprint in ocean freight with 170,000 additional controlled TEUs.
CMA CGM has been CEVA’s reference shareholder since its listing on the SIX Swiss Exchange in May 2018. CMA CGM currently owns a non-controlling 33% stake of the registered shares of CEVA Logistics, and has made a pre-announcement of a public tender offer at a value of CHF30 (US$30) per share in cash. The public tender offer process is expected to close in April 2019.
“We are convinced of CEVA’s potential,” said Rodolphe Saadé, chairman and chief executive officer of CMA CGM. “This industrial project will make it possible to speed up its transformation and to make it a more proficient leader of logistics, to the benefit of its clients, its employees and its shareholders. We are eager to work alongside all CEVA’s teams. Combined with their expertise and commitment, this strategic partnership will guarantee CEVA’s independence, and will represent a new era in CEVA’s history.”