CMA CGM’s ongoing effort to acquire CEVA Logistics is “a significant strategic move” for the French liner company, according to chief executive and chairman Rodolphe Saade.
He said the takeover offer last month was prompted by shipping mergers coming to a halt, requiring the French liner operator to pursue new avenues, including logistics.
Saade's comments were made in the UK capital last week during the London Business School Middle East Conference.
Saade's acqusitions
His stewardship of CMA CGM has seen it involved in the acquisitions of Singapore-based Neptune Orient Lines, Mercosul Line of Brazil and Finnish company Containerships.
But Saade's belief that consolidation has come to a stop — perhaps temporarily — led him to pursue complementary logistics activities.
CMA CGM is due to complete the takeover offer this week for CEVA, a Swiss-based logistics and warehousing provider that will be integrated into the CMA CGM group.
The shipowner is paying CHF 30 ($30.25) per share to raise its stake from 33% in the Swiss company.
The tender ended yesterday, with settlement scheduled for mid-April.
CEVA employs 65,000 people with a turnover of $7bn, meaning the acquisition will increase the CMA CGM payroll to 100,000 staff with revenues of $30bn.
Taking control
“Our objective is to obtain a significant majority of shares and therefore take control,” Saade said.
He expects it to change CMA CGM “in size and scope, becoming a stronger leader, both in maritime and logistics”.
“It is a significant strategic move for us,” Saade said.
[Leading shippers] will be in a position to avoid having too many intermediaries and have one party dealing with their chain of transport
Rodolphe Saade
Saade’s strategy is based on providing shippers with end-to-end logistics. Leading shippers, such as Walmart, “will be in a position to avoid having too many intermediaries and have one party dealing with their chain of transport”, he added.
“It doesn’t mean that we will be doing the whole chain from A to Z, but we will control it for them,” Saade said.
CMA CGM began building up a stake in CEVA in April 2018, when it spent up to $462m on a subscription for convertible securities.
Turnaround challenge
But it faces the challenge of turning around the fortunes of a company that has been chronically unprofitable since it was established by venture-capital firm Apollo Global Management in 2007.
While CMA CGM and CEVA will remain separate companies, the latter is expected “to revisit all their costs and make sure they are in a position to better negotiate with others”, Saade said.
“We believe they can benefit from our way of doing business. We are a big company, so we have strong bargaining power when we negotiate with vendors.”
The goal is to increase CEVA’s turnover to $9bn by 2021 and to boost adjusted Ebitda to between $470m and $490m, compared with $260m in 2018.
Saade expects CEVA staff will notice a difference working under “a different mentality, a different way of doing business” to that of the former private-equity owners.
Family business
He cited the long-term vision and family values of the Saade shipping interests, where he has been working for a quarter of a century.
Born in Lebanon, Saade moved to Marseilles with his family in the 1970s.
After earning a degree in Canada at 23, he set up his own company distributing bottled water in Lebanon.
In 1994, Saade opted to join the family business, which in those days was run by his late father Jacques. “I had to prove myself and climb the ladder, step by step,” he said.
Today, he describes running CMA CGM as “a much bigger challenge”, but said the Marseilles-based company is strong.
“The world is changing. That’s why companies need to transform themselves,” he added.
