Australia’s competition watchdog has declared that it will not oppose DP World’s proposed acquisition of Silk Logistics because the purchase is unlikely to engage in discrimination and won’t substantially lessen competition.
“Although DP World Australia may be able to engage in subtle forms of discrimination without adversely affecting its primary function as a container terminal, such conduct is unlikely to reach a level so as to substantially lessen competition,” ACCC Commissioner Dr Philip Williams said.
“DP World Australia would continue to face competition from a range of established and prospective container transport providers,” he added.
The ACCC considered the integration of DP World Australia’s container terminals with Silk’s national container transport and warehousing business and the potential impact on container transport service providers in the supply chain. It examined whether DP World Australia would have the ability and incentive to engage in discriminatory conduct against Silk’s container transport rivals by raising their costs or lowering their quality of access to DP World Australia’s terminals.
It also considered whether DPW could adopt an “exclusionary bundling strategy” by offering combined stevedoring and container transport services at below-cost prices, and whether the deal could give DPW access to commercially sensitive information about rival transport companies in a way that would distort competition. The ACCC however concluded that “implementing such strategies would likely be commercially and operationally impractical for DP World Australia”.
About Silk Logistics
Silk is an Australian Stock Exchange-listed national container logistics provider that hauls import and export containers to and from ports where DP World Australia operates. Silk announced that it was “pleased” with the announcement from the ACCC, but noted that the purchase is still conditional upon approval by the Foreign Investment Review Board, by approval from Silk shareholders and the Supreme Court of New South Wales. The date of any transaction is yet to be fixed.
DPW announced in November 2024 that it planned to buy 100% of the issued share capital in Silk. Under the terms of the potential deal as announced at the time, Silk shareholders were to be paid AUD$2.14 per Silk share less any dividends declared or paid prior to implementation. The proposed payment represented a 45.6% premium to the last close and a 60.6% premium to Silk’s one month volume-weighted average stock price to 08 November 2024.
The Board of Silk had unanimously recommended that Silk shareholders vote to approve the deal.
At Silk’s Half Financial Year Results, in February 2025, the company reported revenue of $287.9 million, an increase of 4.1% on the prior corresponding period, underlying Earnings Before Interest Tax Depreciation and Amortisation of $47.9 million. EBITDA is a measure of the profitability of core business operations that strips out the impacts of financial decisions and non-cash expenses. Silk also reported an underlying EBIT of $15.6 million. The company noted that its revenue was underpinned by $31 million in new business and an expansion of the company’s bulk logistics offering. The company noted that it had experienced “stable volumes” in its port logistics business.
