ACCC raises competition concerns over DP World’s $174m takeover of Silk Logistics

Australia’s competition watchdog has raised a red flag over the proposed $174.5 million takeover offer for Silk Logistics Holdings (ASX: SLH) by DP World Australia over fears that it could put added pressure on prices for importers and exporters in an already tight logistics market.

The announcement today exacted a heavy toll on Silk's stock price, pushing shares in the port-to-door logistics group down more than 22 per cent this morning.

The Australian Competition and Consumer Commission says the buyout by DP World raises competition concerns over the global giant’s control of Australia’s container transport services.

DP World, a Dubai-based company that operates container stevedores in Sydney, Melbourne, Brisbane and Fremantle, had offered $2.09 per share to acquire Silk Logistics which is one of the only door-to-door container logistic providers in the country.

Shares in Silk Logistics slumped to a low of $1.537 this morning on the prospect that the ACCC could scupper the deal.

The competition regulator, which has to give its approval before the Foreign Investment Review Board (FIRB) runs its eyes over the deal, notes that DP World Australia services about a third of the containers processed at the four ports from which it operates in Australia.

The ACCC says the deal will effectively lead to DP World Australia, already a major container stevedore nationally, owning a national container transport provider - potentially stifling competition.

“We have heard concerns that DP World’s ownership of a national container transport provider is likely to reduce competition in the supply of container transport services,” says ACCC Commissioner Dr Philip Williams.

“This could lead to higher prices and reduced quality for Australian importers and exporters.”

Williams says the ACCC review will focus on DP World Australia’s “ability and incentive to either increase terminal fees or worsen the quality of terminal services for container transport providers that compete with Silk” should the acquisition proceed.

“We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals,” he says.

“This is because a discounting strategy involving below-cost prices could reduce container transport competition allowing a combined DP World Australia and Silk to raise prices later.”

The ACCC also has concerns that DP World could access and use commercially sensitive data about Silk’s rivals “in a way that damages competition”.

The competition regulator notes that there is currently “very limited competition between stevedores on terminal charges to container transport providers”.

DP World is a major global operator that accounts for an estimated 10 per cent of global container traffic with its operations covering freight-forwarding services, contract logistics and maritime services.

The group has 78 port terminal operations globally, including the four in Australia.

Silk Logistics is a port-to-door services provider offering warehousing, distribution and port logistics services, operating from 46 facilities across NSW, Victoria, Queensland, South Australia and Western Australia.

Despite the concerns raised by the ACCC, the Silk Logistics board still considers the takeover to be in the best interests of shareholders and has affirmed the board’s unanimous recommendation that they vote in favour of the proposal.

“Silk and DP World Australia remain committed to the transaction and will continue to work together to progress ACCC and FIRB approval and all other regulatory steps required for implementation of the scheme,” says the company.

The ACCC has sought submissions from interested parties by 27 March 2025 and has indicated it will announce a final decision on the proposed takeover on 5 June 2025.