Silk Logistics shares soar as DP World deal pulls closer
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More news: Shares in Silk Logistics soared in early trading after the ACCC said it will not oppose its acquisition by global logistics giant DP World.
Silk shares were up 22.7% to $2.11 at 11am AEST.
The deal still remains subject to approval by the Foreign Investment Review Board, the NSW Supreme Court, and Silk shareholders.
ACCC clears DP World’s buyout of Silk Logistics
The news: The competition regulator has said it will not oppose logistics giant DP World’s buyout of small-cap ASX-listed Silk Logistics Holdings.
The context: The Australian Competition and Consumer Commission (ACCC) said that after an "extensive investigation", it concluded that the proposed acquisition would likely not result in a substantial lessening of competition.
Dubai-based DP World, Australia's biggest ports operator, manages container stevedores in Sydney, Melbourne, Brisbane and Fremantle. Melbourne-based Silk, a domestic container logistics provider, hauls import and export containers using trucks to and from ports where DP World operates.
The ACCC's investigation focused on whether DP World would have the ability and incentive to engage in discriminatory conduct against Silk’s container transport rivals by raising their costs or lowering their quality of access to DP World's terminals.
The regulator concluded that DP World would be unlikely to engage in forms of discriminatory conduct which would lead to material operational delays and disruption at its terminals.
In an ASX release, Silk said implementation of the scheme remains subject to other conditions, including approval by the Foreign Investment Review Board, the NSW Supreme Court, and Silk shareholders.
What they said: “Although DP World Australia may be able to engage in subtle forms of discrimination without adversely affecting its primary function as a container terminal, such conduct is unlikely to reach a level so as to substantially lessen competition,” said ACCC commissioner Philip Williams.
“DP World Australia would continue to face competition from a range of established and prospective container transport providers.”
The sources: ACCC media release, ASX
