DFDS has today completed the acquisition of FRS Iberia/Maroc that has a leading position on the Strait of Gibraltar short-sea ferry market connecting Spain and Morocco.
The acquisition expands DFDS’ network to a region where growth in the coming years is expected to be supported by nearshoring of supply chains closer to Europe.
“We are excited to start the integration of FRS Iberia/Maroc and look forward to applying our joint capabilities to grow the business while continuing to provide reliable, efficient ferry services to both passengers and freight customers”, says Torben Carlsen, CEO of DFDS.
FRS Iberia/Maroc has three routes operated by a total of 850 staff of which just over 400 are own employees. Revenue for 2023 was DKK 1.0bn (preliminary).
Growth-focused business and integration plan
The main focus of the business plan is to deploy DFDS’ freight and passenger capabilities to grow and optimise operations building on expected annual trade growth of 8% between Morocco and Europe for the next five years.
The integration of the passenger business is expected to benefit from sharing of operating and yield management capabilities, not least from the Channel short-sea routes. Optimisation of digital distribution channels is moreover expected to increase the share of online bookings.
The freight activities will be strengthened by becoming part of a pan-European freight ferry network with expertise in operations, product development, and customer service. The integration of the freight activities is also expected to benefit from a customer overlap and cross sales opportunities.
DFDS’ owned combined freight and passenger ferry (RoPax), Patria Seaways, was chartered by FRS Iberia/Maroc in November 2023 for interim deployment on the Algeciras-Tanger Med route.
Integration synergies are expected to be driven primarily by growth synergies as limited cost synergies are expected. The integration is expected to be completed within three years.
FRS Iberia/Maroc will become part of the Ferry Division and their top management team consisting of Ronny Moriana Glindemann and Tim Gädecken have joined DFDS and will continue to manage the business.
Transaction structure and financing
DFDS has acquired FRS Iberia/Maroc for a debt-free price equal to an EV/EBITDA multiple of 6x based on the expected EBITDA for 2024. The transaction will be financed by a combination of loan financing and use of existing cash funds.
The transaction increases DFDS’ financial leverage, NIBD/EBITDA, by 0.1x on a pro forma basis.
The transaction is expected to be ROIC accretive vs the current return level and to be accretive to earnings per share (EPS) from closing.