CEVA Logistics launches IPO on SIX Swiss Exchange and sets price range at CHF 27.50 to CHF 52.50 per share

 

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CEVA Logistics launches IPO on SIX Swiss Exchange and sets price range at CHF 27.50 to CHF 52.50 per share

Company Highlights

• CEVA Logistics is one of the world’s leading third-party logistics companies with over 56,000 employees and temporary/agency workers and a comprehensive service portfolio in Freight Management and Contract Logistics 
• Strong strategic platform through global presence in over 160 countries with a strong footprint in high growth markets, notably Asia, a diversified blue-chip customer base and end-to-end solutions capabilities
• Revenues in 2017 were USD 7.0 billion and Adjusted EBITDA was USD 280 million
• Good Q1 2018 trading: Revenue estimated up at approx. 5.3% in constant FX versus prior year, Adjusted EBITDA expected at approx. USD 65 million, up approx. USD 10 million versus prior year
• As of the first day of trading, the new Board of Directors is expected to consist of eight Directors, of which six are independent, under the leadership of the designated chairman Prof. Dr. Rolf Watter

Transaction Highlights

• All primary IPO with target gross proceeds of approximately CHF 1.2 billion (incl. concurrent private placement to new strategic shareholder)
• A potential new strategic shareholder, CMA-CGM Group ("CMA-CGM"), has committed to invest between approximately CHF 380 million and CHF 450 million in CEVA by purchasing mandatory convertible securities in a concurrent private placement translating into 24.99% of CEVA's entire issued and outstanding share capital 
• The IPO and concurrent private placement are mutually conditioned upon each other
• The proceeds from the IPO and concurrent private placement will provide CEVA with increased financial flexibility to accelerate growth in order to repay debt and deleverage the balance sheet to 2.5 – 3.0x Net Debt/Adjusted EBITDA
• Implied market capitalisation of between approximately CHF 1.5 billion and CHF 1.8 billion (pre over-allotment option)1 
• Start of trading on SIX Swiss Exchange anticipated to be 4 May 2018.

 1 Calculated on an as-converted basis as CMA-CGM will purchase a mandatory convertible instrument

Baar, Switzerland, 20 April, 2018 – CEVA Logistics AG (“CEVA” or the “Company”), one of the world’s leading third-party logistics companies with USD 7.0 billion of revenue in 2017, today announces the launch of its initial public offering (“IPO”) and proposed listing on SIX Swiss Exchange with the publication of the offering and listing prospectus and the start of the bookbuilding period. The price range for the offered newly issued registered shares, with a nominal value of CHF 0.10 each, has been set at CHF 27.50 to CHF 52.50, which implies a total market capitalisation of approximately CHF 1.5 billion to CHF 1.8 billion for the Company (pre over-allotment option)1.

The IPO is a primary offering by the Company consisting of (i) up to 29.9 million newly issued registered shares of the Company (the “Base Offering”), and (ii) up to 2.5 million newly issued registered shares pursuant to an over-allotment option (the “Over-Allotment Option”) granted by the Company as set out below. CMA-CGM has agreed to make an investment in the Company by purchasing CHF 380 million to CHF 450 million of  mandatory convertible securities in a concurrent private placement. The IPO and the concurrent private placement are mutually conditioned upon each other. The expected gross proceeds of approximately CHF 1.2 billion are expected to be used to repay debt, in order to deleverage the balance sheet to 2.5 – 3.0x Net Debt/Adjusted EBITDA. This should allow CEVA to unlock additional growth opportunities with existing and new customers and result in lower finance charges. As a result of deleveraging and anticipated profitability improvements, CEVA expects to generate attractive cash flows.

CEVA has granted the syndicate banks an Over-Allotment Option, exercisable for 30 calendar days after the first trading date, pursuant to which the banks may purchase up to 2.5 million newly issued registered shares. The Over-Allotment Option may be increased to such number of shares representing up to 15% of the total number of newly issued registered shares sold in the IPO, and will in no event exceed 15% of the total number of newly issued registered shares sold in the IPO.

The current three largest shareholders of CEVA — investment funds managed by affiliates of (i) Capital Research and Management Company, (ii) Franklin Advisors, Inc. and (iii) Apollo Global Management LLC — will remain invested in the Company after the IPO and have agreed to a lock-up period of 180 days from the first day of trading (subject to customary exceptions). The Company has committed to a lock-up period of 360 days and the members of the Board of Directors and the members of the Group Executive Board have committed to a lock-up period of 360 days from the first day of trading (subject to customary exceptions).

The CEVA Logistics Opportunity

CEVA is one of the world’s leading third-party logistics (3PL) companies, offering a broad spectrum of services in both Contract Logistics and Freight Management. In 2017, the Company generated revenues of USD 7.0 billion and Adjusted EBITDA of USD 280 million through over 56,000 employees and temporary/agency workers in more than 1,000 locations.

Established in 2007 through the merger of TNT Logistics and Eagle Global Logistics, CEVA draws on a long-standing tradition and expertise in logistics. Since joining in 2014, CEVA’s CEO Xavier Urbain has brought on an almost entirely new management team which has executed a comprehensive transformation of the business which has much improved CEVA’s competitive position, generated strong sales momentum and improved financial performance.

CEVA has a strong strategic platform through its global presence (including a strong footprint in Asia), its comprehensive service portfolio, its long-standing blue-chip customer base and its supply chain management. Its strategy is to be the logistics provider of choice for complex supply chains in selected markets through its solution-oriented business model. Its aspiration is to improve EBITDA margins through continued focus on productivity in Freight Management and Contract Logistics operations, further cost reductions and improved pricing. CEVA targets EBITDA margins of at least 4% over the medium-term (vs. 3.3% currently). CEVA aims to exceed market growth, with at least 4% annual revenue growth over the medium-term through expected continued strong growth of the global logistics market, share gains with existing customers and development of new multi-national customers.

CEVA has continued to trade well in the first quarter in 2018, in line with expectations. Whilst its financials have not yet been reviewed by its auditors, CEVA expects revenue growth of approximately 5.3% over the prior year period in constant currency, driven by higher freight rates and moderate volume growth in Freight Management and solid growth in Contract Logistics. CEVA expects Adjusted EBITDA to be approximately USD 65 million, an increase of approximately USD 10 million over the prior year period in constant FX. CEVA believes that it has expanded margins during the first quarter 2018 period in Freight Management and in Contract Logistics.

CMA-CGM, the third largest container shipping group in the world, has committed to make a strategic cornerstone investment of CHF 380 million to CHF 450 million in CEVA in a concurrent private placement. This investment which is expected to ultimately result in an ownership of 24.99% in CEVA’s entire issued and outstanding share capital1, prior to any exercise of the Over-Allotment Option. The commitment is conditional upon certain conditions in connection with the IPO, including a successful completion of the IPO at an offer price within the price range. CMA-CGM will invest in a convertible instrument that replicates all material features of a registered share in CEVA other than voting rights, and shall mandatorily convert, at the IPO price, to registered shares once certain regulatory approvals have been obtained. CMA-CGM has entered into a lock-up agreement for one year following the IPO and has agreed not to increase its shareholding in CEVA for six months post-IPO. If a third party submits a takeover offer for CEVA and the offer is recommended by CEVA’s Board of Directors, CMA-CGM has agreed to either tender its shares in-line with the Board’s recommendation or submit a superior offer.

In addition to CMA-CGM’s investment in CEVA, CMA-CGM and CEVA plan to work together to expand their commercial co-operation and to develop complementary services which address the increasing customer need for integrated end-to-end solutions and one-stop shop providers. CMA-CGM and CEVA believe that there are a number of areas where such co-operation could create significant value to customers and would be mutually beneficial to both.
 

As of the first day of trading, the Board of Directors is expected to consist of the eight non-executive members listed below under the leadership of the designated Chairman Prof. Dr. Rolf Watter and including two Board members nominated by CMA-CGM. A ninth non-executive Board member will be nominated in due course and will be independent from the Company and its shareholders.

Name	Nationality	Age	Title	Member as of
Rolf Watter	Switzerland	60	Chairman of the Board of Directors	3 May, 2018
Marvin O. Schlanger	USA	70	Independent member	2 May, 2013
Emanuel R. Pearlman	USA	58	Independent member	1 June, 2013
John F. Smith	USA	67	Independent member	1 June, 2013
Rosalind Rivaz	United Kingdom	62	Independent member	3 May, 2018
Victor Balli	Switzerland	60	Independent member	3 May, 2018
Rodolphe Saadé	France	48	Member	3 May, 2018
Daniel Hurstel	France	62	Member	3 May, 2018

 

CEVA aims to generate shareholder returns through an appreciation of its share price and dividends to be paid out to shareholders. The Company expects to pay its initial dividend for the financial year 2018, subject to the dividend policy to be determined by the new Board of Directors. Once further delivered, the Company targets a payout ratio of at least 40%.

The bookbuilding process starts on 20 April 2018 and is expected to end on 2 May 2018. The announcement of the final offer price and the final number of offered shares is expected to be published on or around 3 May 2018. The listing and commencement of trading in the Company's shares on SIX Swiss Exchange is expected to take place on 4 May 2018.

In connection with the IPO, CEVA Holdings LLC shall be merged with CEVA Logistics AG, which shall become the new holding company of CEVA Group simultaneously with the IPO. The merger is expected to take place on or around 3 May 2018, prior to the listing and commencement of trading in the Company’s shares. The current three largest shareholders of the Company, who jointly hold the requisite number of shares to approve the merger, have expressed their intention to vote in favour of the merger. In addition, prior to the merger, CEVA will simplify its capital structure and eliminate the intercompany 10% Second Lien Senior Secured PIK Note due 2023 between CEVA Holdings LLC and CEVA Group plc through an exchange into equity.

The IPO will consist of a public offering to institutional and retail investors in Switzerland and private offerings to certain qualified institutional investors in various other jurisdictions.

Credit Suisse and Morgan Stanley are acting as Joint Global Coordinators. Deutsche Bank, UBS Investment Bank and Berenberg are acting as Joint Bookrunners. HSBC and Vontobel are acting as Co-Bookrunners. Rothschild is acting as independent IPO advisor to the Company.

Key Data

Listing	SIX Swiss Exchange (International Reporting Standard)
Ticker symbol	CEVA
Swiss security number	41 323 739
ISIN	CH0413237394
Price range	CHF 27.50 to CHF 52.50 per offered share
Offered Shares	Base Offering of up to 29,856,537 newly issued registered shares, with a nominal value of CHF 0.10 each Over-Allotment Option of up to 2,512,671 newly issued registered shares. The Over-Allotment Option may be increased to such number of shares representing up to 15% of the total number of newly issued registered shares sold in the IPO, and will in no event exceed 15% of the total number of newly issued registered shares sold in the IPO.

 

Today’s Media Conference at 08:30 CEST

CEVA will hold a media conference today, 20 April 2018 at 08:30 CEST. The event will take place at Au Premier Restaurant (Zurich main station), Zurich. Xavier Urbain, CEO, and Peter Waller, CFO, will inform about the planned IPO and provide further insight into CEVA’s business and prospects. Registration is not required.

Tentative Schedule

Bookbuilding period	From 20 April 2018 to 2 May 2018 at 12:00 noon CEST for private banking and retail orders; and 3:00 p.m. CEST for institutional orders, in each case subject to extension or shortening of the bookbuilding period
Publication of final offer price and final number of offered shares	3 May 2018
First day of trading	4 May 2018
Payment and settlement	8 May 2018
Last day for exercising the Over-Allotment Option	1 June 2018

 

Notes to the Editors:

• In connection with the proposed IPO, CEVA Holdings LLC shall be merged with CEVA Logistics AG, Baar, Switzerland, which shall become the new holding company of the CEVA group simultaneously with the IPO. The Company is already managed out of Baar, Switzerland, where the majority of the Group Executive Board is based
• Currently, the three principal shareholders of CEVA are investment funds managed by affiliates of (i) Capital Research and Management Company, (ii) Franklin Advisers, Inc. and (iii) Apollo Global Management LLC, which each held approximately 22%, 25% and 22%, respectively, of the Company’s shares as per the date of the merger on or around 3 May 2018. They will be significantly diluted through the planned IPO
• Prior to the merger, CEVA will simplify its capital structure and eliminate the intercompany 10% Second Lien Senior Secured PIK Note due 2023 between CEVA Holdings LLC (which owns 99.99% of the equity of CEVA Group Plc) and CEVA Group plc through an exchange into equity. The PIK Notes have been in place since the Company’s recapitalisation in 2013 and the combined amount of its principal and accrued interest is approx. USD 1.0 billion as of the expected conversion date
• Adjusted EBITDA is EBITDA before specific items and share-based compensation and includes 50% of the EBITDA of the Anji-CEVA Joint-Venture in China

This news release does neither constitute an offer to buy or to subscribe for securities of CEVA Logistics AG nor a prospectus within the meaning of applicable Swiss law (i.e. article 652a of the Swiss Code of Obligations) nor a listing prospectus within the meaning of article 27 et seq. of the SIX Swiss Exchange Listing Rules or within the meaning of similar rules of any other exchange or regulated trading venue in Switzerland. Investors should make their decision to buy or to subscribe for shares of CEVA Logistics AG solely based on the offering and listing prospectus dated 19 April 2018 published by CEVA Logistics AG. The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, in any jurisdiction in which such offer or solicitation would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction. Copies of the offering and listing prospectus (and any supplements thereto) are available free of charge from Credit Suisse AG (email: equity.prospectus@credit-suisse.com).

This news release is not for distribution, directly or indirectly, in or into the United States (including its territories and dependencies, any state of the United States and the District of Columbia), Canada, Japan, Australia or any jurisdiction into which the same would be unlawful. This news release does not constitute or form a part of any offer or solicitation to purchase, subscribe for or otherwise acquire securities in the United States, Canada, Japan, Australia or any jurisdiction in which such an offer or solicitation is unlawful. CEVA Logistics AG shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer of these securities in the United States.

The CEVA Logistics AG shares have not been approved or disapproved by the US Securities and Exchange Commission, any state's securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the CEVA Logistics AG shares or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.

As regards the United Kingdom, this news release is being distributed for information purposes only and its distribution is not, nor is it intended to be, a communication of an invitation or inducement to engage in investment activity or an offer of securities to the public in the United Kingdom. No prospectus offering securities to the public will be published in the United Kingdom. Without prejudice to the foregoing, this news release, and any other material related thereto, is only being distributed to and is only directed at (i) persons who are outside the United Kingdom, or (ii) investment professionals falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within article 49(2)(a) to (e) of the Order, or (iv) persons falling within article 43 of the Order, or (v) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000, as amended, in connection with the issue or sale of shares of CEVA Logistics AG as shall be described in the offering and listing prospectus published by CEVA Logistics AG for that purpose) may otherwise be lawfully communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this news release or any of its contents.

This news release does not constitute an “offer of securities to the public” within the meaning of Directive 2003/71/EC of the European Union, as amended (the “Prospectus Directive”) of the securities referred to herein in any member state of the European Economic Area (the “EEA”). Any offers of securities referred to in this news release to persons in the EEA will be made pursuant to an exemption under the Prospectus Directive, as implemented in member states of the EEA, from the requirement to produce a prospectus for offers of the securities. In any EEA member state that has implemented the Prospectus Directive, this document is only addressed to and is only directed at qualified investors in that member state within the meaning of the Prospectus Directive, i.e., only to investors who can receive the offer without an approved prospectus in such EEA member state.

Credit Suisse AG, Morgan Stanley & Co. International plc, Deutsche Bank AG, London Branch, UBS AG, Joh. Berenberg, Gossler & Co. KG, HSBC Bank plc and Bank Vontobel AG (together, the "Managers") and their respective affiliates are acting exclusively for the Company and no one else in connection with the offering. The Managers will not regard any other person as their respective clients in relation to the offering and will neither be responsible for providing the protections afforded to clients nor for providing advice in relation to the IPO, the contents of this announcement or any transaction, arrangement or other matter referred to herein. Neither the Managers nor any of their respective affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of the respective entity in connection with this announcement, any statement contained herein or otherwise.

In the event of any discrepancy or inconsistency between any translated versions of this news release, the English version shall prevail.