Maersk CEO seeks new M&A deals after Schenker withdraws offer

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AP Moller-Maersk A/S is looking for new acquisition targets after recently pulling out of what could have been the largest transaction in its history, its chief executive said.

Maersk “definitely” wants to pursue new acquisition targets and it is a “key strategic element” for the company, Chief Executive Vincent Clerc said in an Aug. 7 interview with Bloomberg TV.

The Danish shipping group last month withdrew plans to bid for Deutsche Bahn AG’s DB Schenker logistics unit at a potential valuation of about $16 billion, Bloomberg News reported. The change of heart comes as the Copenhagen-based company’s cash position improves and it has tripled its 2024 profit forecast since May as disruptions to Red Sea trade have boosted freight rates.

Maersk is ranked No. 5 on the Transport Topics list of the largest global transportation companies. DB Schenker is ranked No. 25 on the Transport Topics Top 100 list of the largest logistics companies in North America.

📢 Maersk continued to build momentum in the second quarter, recording volume growth across all segments and improving financial performance, with the EBIT margin reaching 7.5% compared to 1.4% in the first quarter.

👉 Read more: https://t.co/17UkgdhwP2#Maersk #resultsmaerskresults photo:twitter.com/ViPjRRGMnq

— Maersk (@Maersk) August 7, 2024

“The decision we made on Schenker was based on some integration challenges that we could have anticipated after doing our due diligence,” Clerc said. “But it’s not a change of direction from a strategic perspective.”

Maersk, which controls about a sixth of global container trade, has in recent years been considering acquisitions in land transport and freight forwarding — where profit margins have historically been higher than at sea. The group will also continue to “prioritize organic growth,” the CEO said.

The stock fell 4.5% when the Copenhagen Stock Exchange opened on August 7.

Maersk’s interest in DB Schenker was far from straightforward. In February 2023, when Clerc had only been in his position for a month, the CEO explicitly ruled out any interest in the unit, saying there was “no long-term value for shareholders in doing a massive deal.” But a year later, he told analysts he had changed his mind, saying Maersk needed to consider buying the German target because the deal would “change the landscape in logistics.”

The shipping group also released its full second-quarter earnings report on Aug. 7, after releasing preliminary data a week earlier that included a raised profit forecast.

In an interview with Bloomberg, Maersk’s CEO played down the prospect of resuming the buyback program, which was suspended last year as overcapacity weighed on freight rates. Clerc said there was still too much uncertainty about the macroeconomic backdrop, adding that Maersk would “stay cautious” to “make sure we have the strength in our balance sheet to weather whatever comes our way.”

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