South Korean logistics firm CJ Korea Express is on track to clinch a cross-border merger and acquisition (M&A) deal for the first time in its history.
CJ Korea Express’s move to take over a foreign logistics company is part of an effort to become a comprehensive global logistics company by reshaping its domestically-focused business portfolio to secure its overseas profit bases.
CJ Korea Express is conducting due diligence to acquire US-based logistics company Phoenix International, according to sources in the investment banking industry Tuesday. Citigroup Global Markets was selected as a lead manager for the deal. As soon as due diligence is completed, CJ Korea Express will decide on whether to submit a main bid to officially declare its bid for Phoenix international.
CJ Korea Express established a corporation in New York, the US in 1974 and has been developing parcel delivery business on a B2C (business-to-consumer) and B2B (business-to-business) basis. However, its sales remained stagnant in the US due to its restricted local distribution network.
“Phoenix International secured global logistics network worldwide as well as in North America, and also has sufficient vehicles for logistics services,” a source in the logistics industry said. “If CJ Korea Express, which has been making all-out efforts to expand its logistics business on a B2B basis, acquires Phoenix International, it will enjoy a rapid growth in sales.”
Meanwhile, Phoenix International generated $1.0 billion (1.13 trillion won) in sales last year, and has 74 offices and 2,000 employees worldwide. Phoenix International is valued at approximately $500 million, which is 10 times as higher the company’s annual average EBITDA (earnings before interest, taxes, depreciation, and amortization) of $50 million.
“CJ Korea Express is currently mulling over acquiring Phoenix International in an attempt to expand its business in the US,” a CJ Korea Express official said. “Still, it is too early to discuss details for now.”