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Creating a solid platform for growth in customs services in Europe
A.P. Moller - Maersk has reached an agreement with Bridgepoint Development Capital to acquire KGH Customs Services (KGH), a Sweden-based specialist in trade and customs management services in Europe. This will further enhance Maersk's capabilities as an integrated container logistics company, offering end-to-end supply chain solutions to its customers.
With its specialised expertise across freight modes (air, ocean, land) and deep knowledge in selected industries, combined with innovative technology, KGH will significantly improve Maersk's overall offering within customs services. KGH has a strategy focused on digital solutions and technology as an enabler for a more seamless customer experience, which also corresponds with Maersk's own digital transformation journey.
Maersk sees KGH as a perfect fit to Maersk offerings within logistics and services as well as another key building block in its strategic ambitions.
There are no end-to-end solutions without customs clearance. With KGH, the Company will not only be able to strengthen its capabilities within customs services and related consultancy, but also reach more of its customers in Europe through a larger geographical footprint and digital solutions that will enhance the ability to meet customers´ end-to-end supply chain needs. W
Based in Gothenburg, Sweden, KGH is a well-known and respected partner to a wide range of authorities, providing valuable consulting and advice, most recently in the connection with Brexit, as advisors to various authorities in the EU and the UK. KGH has in the past years achieved double-digit annual growth resulting in a revenue of approximately SEK890.0 million in 2019 (US$95.5 million), recurring EBITDA of approximately SEK160.0 million (US$17.2 million) and an EBITDA margin of approximately 18.0%. KGH has 775 employees and a yearly business of 1.98m clearances.
The acquisition of KGH makes Maersk an attractive partner for its customers operating in individual countries, as well as for those looking to combine several geographies under one service provider. With the acquisition of KGH, Maersk will have a solid platform for growth in customs services in Europe with own setups operating in 22 European countries with a total of 2.38m clearances on a yearly basis, 960 specialised employees and a combined turnover of SEK1.02 billion (US$109.4 million).
Maersk will acquire KGH for a consideration of SEK2.6 billion (US$279.0 million) on a cash and debt free basis equivalent to a multiple of 16.3x 2019 EBITDA before synergies, excluding an earn-out component contingent on future Brexit performance. When ramped up, annual EBITDA synergies from the combination are expected to amount to approximately SEK50.0 million-SEK75.0 million (US$5.4 million-US$8.0 million).
The closing of the acquisition is subject to customary regulatory approvals. Until then, Maersk and KGH remain two separate companies and thus will do their business as usual.