Global logistics giant DP World makes premium offer for Imperial

It has indicated interest in the group’s significant African footprint and broader potential synergies: Esha Mansingh – executive VP, corporate affairs and investor relations at Imperial.

DUDU RAMELA: Dubai Ports World, or DP World as it’s known, has made an offer to buy 100% of South Africa’s Imperial Logistics for R12.7 billion. DP World is one of the world’s largest operators of Marine ports and inland cargo terminals, stretching from Gateway in London to hubs in Africa, Russia, India and the Americas. The deal is expected to close by the first quarter of 2022. DP World handles an estimated 10% of the world’s global container traffic.

We speak now to Esha Mansingh, executive vice-president of corporate affairs and investor relations at Imperial. Thank you so much for your time. You have entered into a transaction-implementation agreement. What are we talking about essentially, and what is contained in that agreement?

ESHA MANSINGH: You are absolutely right. Good afternoon and thanks for having me. Certainly the Imperial announcement, as you mentioned earlier, affirms the intention by DP World – and they’re making a cash offer. It effectively entails their acquiring all of the issued ordinary shares of Imperial by a virtual scheme of arrangement.

The offer that is proposed on the table, which is still subject to shareholder approval and other regulatory approval, particularly in South Africa, is R66 per ordinary share. So in a nutshell that covers the key terms of the agreement.

DUDU RAMELA: As you rightly mentioned, it’s subject to approval by South African authorities and Imperial shareholders. What factors would be considered in giving it the green light?

ESHA MANSINGH: First of all, Imperial is listed on the JSE and, as we’ve just mentioned the big green light will have to come from our shareholders. That’s one of the steps we need to cross over the next few months as we progress. The other big regulatory engagements that we’re going to be having will be with the Competition Commission in South Africa, together with other regulatory bodies in some of the other countries of operation.

But I would just like to stress that Imperial, together with DP World, is very aware of our commitment to the African continent and to South Africa, particularly in terms of the social investment, the BEE and so forth. So we are hoping to progress with many of those that we’ve already allowed as we go through these developments and engagements over the next few months.

DUDU RAMELA: Speaking of your commitment to the continent, Imperial has been looking to dispose of non-core assets and position itself as the gateway to Africa. So, if this deal goes through, what will it mean for the business?

ESHA MANSINGH: If this deal goes through it will mean that all of Imperial’s businesses that we currently have will be included. That includes our international logistics business which we previously announced was non-core to our Gateway to Africa strategy.

But of course, with DP World now being a global logistics and ports player, there are significant synergies between Imperial’s African businesses and our presence in Africa, as well as our existing European businesses, with DP World. So both businesses will be part of the transaction going forward.

DUDU RAMELA: What about BEE? What have discussions been like where that is concerned?

ESHA MANSINGH: Well, with the Dubai deal to be reviewed, Imperial recently announced that it will be moving forward with a 25% shareholding, particularly in its logistics. Africa operations in South Africa – that deal is still subject to Imperial shareholder approval, and that general meeting will take place at the end of July. It is a condition of this particular offer. So we’re hoping to complete that to a positive vote from our existing shareholders in the next few weeks. It’s critical for ourselves as well as the potential buyer to ensure that we are correctly empowered and that that deal is successful. And you know, it also requires us to ensure that we remain competitive in the South African context, in addition to simply being the right thing to do.

DUDU RAMELA: Esha, if you’d indulge me, please, I’d like us to go a couple of steps back; perhaps just give us context in terms of how you even got to this point where you are being made this offer.

ESHA MANSINGH: Absolutely. Imperial has been through a significant transformation journey from a strategic perspective over the past two years. And we have followed that and tried very hard to clean up the portfolio and rationalise it to focus specifically on our core competitive advantages – being the African continent and our leading position in market access and logistics.

So a lot of working time and effort has been put into that, and into rationalising and making that a very focused business. That said, we’ve made significant progress on that journey. We were approached by DP World. They approached our board and they were very interested in not only looking at our logistics international business which, as you know, was up for sale, but they were also very interested in the significant African footprint that Imperial has developed and the potential synergies of the broader business.

So they approached our board with the offer and following on from that we put together an independent board which excluded our executive directors. The independent board also engaged with an independent party to consider the offer from a fair and reasonable perspective, and the independent party did confirm the offer to be fair and reasonable. And hence the independent board of Imperial is now putting forward the offer for Imperial shareholder approval.

That’s where we are in the process. I think from a management perspective, just looking at some of the strategic synergies that are in play with DP World, we’re very excited about the opportunity to support the deal. And, as you rightfully mentioned earlier, there’s a lot of value to extract that Imperial could find beneficial from DP World’s leading technology, the global network and key trading volumes, to mention just a few [advantages].

DUDU RAMELA: Esha, please, I’d like some clarity. Has Imperial been awarded contracts by the country to import unspecified quantities of Coronavirus vaccine doses?

ESHA MANSINGH: That’s correct. We were one of the two parties awarded the tender a few months ago, as you may recall – I think it was back to March or April – to import vaccinations. Following that, every time there’s an opportunity to do so, it will be considered on a tender basis.

So yes, we are among the parties when the opportunities arise to actually import vaccination.

DUDU RAMELA: So given that the deal is expected to close by the first quarter of 2022, and it is said that this virus is going to be with us for a very long time, what impact will that have on this, if at all?

ESHA MANSINGH: The indications that we have as things currently stand are that we will continue with Imperial as business as usual. The capabilities that we have, certainly in the South African market, will remain as they are. So we foresee that this deal, which is effectively a change of ownership of Imperial, if successful, will not impact any of our activities as things currently stand.

DUDU RAMELA: Esha Mansingh is the executive vice-president of corporate affairs and investor relations at Imperial.


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