The Nasdaq Composite Index (NASDAQ: .IXIC) might be up 40% in a year, but try landing 40% in a single day. Well, one ASX stock can honestly claim such an accomplishment after entering a welcomed takeover offer.
Shares in Silk Logistics Holdings Ltd (ASX: SLH) are trucking 41.5% higher to $2.08 apiece on Monday. It's a remarkable performance, considering the best-performing stock inside the S&P/ASX 200 Index (ASX: XJO) is struggling to crack 4%.
Silk Logistics is a small company with a market capitalisation of less than $100 million prior to today. It specialises in 'port-to-door' delivery through its fleet of primer movers, side loaders, and trailers. Silk also flexes five warehouses across Australia, bolstering its distribution network.
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ASX stock catches the eye of a global player
Small stature has held Silk Logistics back from attracting the attention of a huge name in the logistics industry.
If you're in the logistics game, you have likely heard of DP World. If not, just know that the company is integral to global shipping.
At last estimate, DP World was responsible for approximately 10% of world trade. The business, which is based in the United Arab Emirates, handles cargo logistics, port terminal operations, and maritime services.
For a sense of scale, the ASX-listed stock generated $488.6 million, while DP World raked in ~$27.7 billion in revenue in 2023 — almost 57 times more.
Well, little ol' Silk Logistics managed to court big ol' DP World. The two have entered a scheme implementation deed, which will see Silk shareholders paid a cash consideration of $2.14 per share less any dividends prior to the deal's execution.
Silk's board believes it's a deal worth taking, getting a unanimous recommendation for shareholders to vote in favour of the scheme. At a 45.6% premium to the company's last closing price, DP World's offer values the smaller Aussie businesses at an equity valuation of $174.5 million.
What's next?
What better way to understand what awaits Silk Logistics than by listening to its CEO and managing director, John Sood. The CEO, who also holds a 13.5% stake in the ASX stock, said:
[…] With the benefit of DP World Australia's infrastructure combined with Silk's landside expertise, Silk will continue to focus on providing the highest quality services to its customers. We see strong strategic and cultural alignment between Silk and DP World Australia and we look forward to working together to achieve our shared goals.
An independent expert will review the scheme and provide a report, determining whether the deal is in the best interest of shareholders. From there, DP World will need to receive the good graces of Australia's Foreign Investment Review Board (FIRB).
Assuming everything goes according to plan, the scheme is expected to be implemented in the third quarter of FY2025.
The boom in the ASX stock means Silk Logistics shares are now up 25% in the last year. Before today, investors were staring at a negative return for the 12-month period.
