Are UTi Shareholders Getting Enough in the Buyout?

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UTi Worldwide Inc. (NASDAQ: UTIW) made a huge move in early trading indications on Friday. This comes on the heels of an acquisition agreement and begs the question of whether UTi shareholders are getting enough in this buyout.

The company announced it has entered into a definitive agreement to be acquired by DSV for $7.10 in cash per share. This represents a 34% premium over the 30-day volume weighted average trading price for the ordinary shares and a 50% premium relative to UTi’s closing trading price on October 8.

The transaction, which was unanimously approved by both UTi and DSV’s boards of directors, is valued at roughly $1.35 billion. The acquisition is expected to be completed between January 1, 2016, and March 31, 2016, and is subject to approval by UTi shareholders.

Ed Feitzinger, CEO of UTi, said:

We are very excited to be joining forces with DSV, which we believe will strengthen our value proposition to our clients, while providing a meaningful cash premium to the holders of our ordinary shares relative to the recent trading prices. For our clients and employees, the potential combination of our two businesses has a strong cultural fit, aligned strategy, and a complementary client base and geographic footprint. We have the opportunity to draw on the current strengths and scale of both companies to bring solutions to our clients that we could not have delivered on our own. We believe that the $7.10 cash price to holders of our ordinary shares provided by this strategic combination is the best available outcome for ordinary shareholders while allowing us to develop with DSV a nimble, efficient, and comprehensive service offering for our clients.

So far in 2015 UTI has vastly underperformed the market, the stock is down roughly 61%. Within the past 52 weeks the stock has dropped nearly 56%.

Shares of UTI closed Thursday down 3.3%, at $4.72 in its 52-week trading range of $4.40 to $14.75. In early trading indications on Friday, shares were up 47.3% at $6.95. The stock has a consensus analyst price target of $9.31.

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