11
October
2004
|
07:51
Europe/Amsterdam

Kuehne + Nagel and SembCorp Logistics to cancel cooperation agreement

Kuehne + Nagel and SembCorp Logistics (SembLog) have decided to terminate their commercial agreement, previously scheduled to expire on December 31, 2005. This decision was motivated by the mutual recognition of both parties that the cooperation had not met their expectations. The termination of the agreement will enable both companies to concentrate on their respective business objectives. In addition, the cross-shareholding arrangement between the parties has been unwound, and SembLog’s stake in Kuehne + Nagel is to be in part retained as treasury shares by Kuehne + Nagel International AG and in part placed in a stock exchange transaction.

The cooperation agreement, entered into at the end of 2000, was intended to create a worldwide contract logistics network through a partnership between Kuehne + Nagel, focused on European operations, its wholly owned subsidiary, Kuehne + Nagel Logistics Inc., in North America, and SembLog in the Asia Pacific region.

In the course of the cooperation, both groups have recognised that substiantial differences regarding respective business approaches, industry focuses and scope of services have constrained successful cross-selling activities and joint market penetration.

Although Kuehne + Nagel participated significantly in the fast-growing Chinese economy and generated above-average growth in sea & air logistics, the cooperation prevented the company from expanding its contract logistics business to the expected degree. In addition, increasing customer demands for Kuehne + Nagel services in warehousing and distribution called for the establishment of own operations. The award of the class A License for its activities in China allows Kuehne + Nagel to set up its own business. However, this has been constrained to a significant extent due to the agreement with SembLog not to compete in key markets.

As a result of discussions between Kuehne + Nagel and SembLog, it was mutually decided to terminate the cooperation agreement. Pursuant to the cancellation, SembLog has announced this morning the sale at a price of CHF 203 per share of its entire 20 per cent stake in Kuehne + Nagel, totalling 4.8 million shares. 1,673,641 shares (representing around 7 per cent of Kuehne + Nagel’s share capital) will be retained by Kuehne + Nagel International AG as treasury shares and the remaining 3,126,359 shares (representing around 13 per cent of Kuehne + Nagel’s share capital) will be offered to institutional investors. The offering is intended to commence on October 12, 2004, and expected to price on or about October 19, 2004, and will be accompanied by a management roadshow to institutional investors in major financial centres in Europe and the United States. Kuehne + Nagel has engaged Deutsche Bank as Bookrunner for the share offering.

In addition, Kuehne + Nagel intends to sell its stake in SembLog (representing 5 per cent of SembLog’s share capital).

“Despite an excellent relationship between us, the cancellation of the cooperation agreement is in the best interests of both parties”, said Klaus-Michael Kuehne, President of the Board of Directors of Kuehne + Nagel International AG. “Our organisation can now accelerate growth in the warehousing and distribution business, and better meet the demands of our customers. At the same time, through the share offering, Kuehne + Nagel is able to realise its stated goal of increasing its free float, making our shares more attractive to investors.“