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M&A deals grab headlines

Mergers and acquisitions (M&A) along with corporate restructuring are major components in the financial world
Issa Baluch
Issa Baluch

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Mergers and acquisitions (M&A) along with corporate restructuring are major components in the financial world. It has reached a stage where investment bankers are arranging such transactions on a daily basis, bringing together individual companies to form larger ones.

These business agreements can dictate the fortunes of the companies involved for years to come, with valuations often reaching hundreds of millions, or even billions of dollars.

It's therefore unsurprising that, more often than not, M&A transactions are generally considered newsworthy and receive significant coverage in the media. Keep an eye out on the business sections of your daily newspaper, the odds are great that at least one deadline will announce some kind of global acquisition.

The airfreight industry in the Middle East isn't an exception and a number of logistics companies from this region have embraced the concept of acquisitions to fuel their expansions around the world.

A prime example is Aramex, which has openly declared its ambitions to become the fifth largest logistics service providers in the world by 2010. Although sections of the industry might question these towering aspirations, the company has made considerable progress towards its target by acquiring companies in the European market, including Priority Express in the United Kingdom and TwoWay Vanguard in Dubai.

However, it seems the bulk of activity has been earmarked for the future, with Aramex allocating US$200 million for acquisitions in key international markets, including Asia and the United States. It is currently negotiating for a major stake in a leading Asian company, which has not be named at the moment, but details should be finalised later this year.

On a personal note, the company I founded 19 years ago, Swift Freight International, was recently acquired by Barloworld Logistics, the supply chain management subsidiary of industrial multinational Barloworld, which hails from South Africa.

Barloworld has achieved an average annual turnover of US$6.5 billion plus 26,000 employees in 31 countries worldwide. Its logistics division acquired Swift to advance its services, especially with regard to multimodal transport solutions, with several niche services and logistics activities between South East Asia, the Indian subcontinent, Europe and Africa.

It seems most M&A deals that grab the headlines at the moment are hostile. But for Swift and Barloworld, I would say, it has been a 'friendly' takeover, where both companies are happy and cooperative.

A couple of top management officials from Barloworld will move from South Africa to the United Arab Emirates to oversee Swift operations from its headquarters. At the same time, I will continue to play a leading role in the organisation, alongside the entire management group from Swift.

Branding-wise, both parties will maintain their respective names at the moment, but will definitely expand its trade lanes to span unexplored areas around the world.

It is a milestone for Swift - the staff, management and stakeholders-to be recognised as an organisation with a sound strategy and potential to grow even further as an integral part of the Barloworld group.

I am extremely happy and excited for this organisation and today, Swift has approximately 700 employees in its 46 branches and offices in 21 countries - tomorrow, with Barloworld, the possibilities are endless.

I believe we have a bright future ahead in pursuit of our corporate goal to serve the world from Dubai. So, this is simply the beginning of a new chapter and I'm looking forward to finding out where it takes us.

Issa Baluch is chairman and CEO of Swift Freight International and past president of FIATA. He is the author of Transport Logistics, Past, Present and Predictions (www.transportlogistics.com)

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