Silk Logistics shares tumble on ACCC concerns over DP World buyout
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The news: The Australian Competition and Consumer Commission (ACCC) has cited competition concerns in its preliminary assessment of DP World’s proposed buyout if Silk Logistics, sending the target company’s shares lower.
The numbers: Ports operator DP World in November said it would acquire Melbourne-based Silk for $175 million, with the target company’s board and shareholders voting in favour of the deal.
Silk Logistics shares are down 12% to $1.74 in early trading on the ASX.
The context: The competition regulator said it has heard concerns that the deal is likely to reduce competition in the supply of container transport services in the country.
DP World services about a third of the containers processed at the major Australian ports of Sydney, Melbourne, Brisbane and Fremantle, while Silk is the only national door-to-door container logistic provider. The ACCC has invited submissions from interested parties by 27 March.
“Our review is focused on DP World Australia’s ability and incentive to either increase terminal fees or worsen the quality of terminal services for container transport providers that compete with Silk, after the acquisition,” ACCC Commissioner Philip Williams said.
“We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals.”
The source: ACCC media release
