BAX Global Buys Distribution Services

IRVINE — Air freight giant BAX Global Inc. has agreed to acquire privately held Distribution Services Ltd. for $76 million as part of its strategy of expanding its worldwide services.

Irvine-based BAX, formerly Burlington Air Express, is best known for handling air shipments for big corporate customers including General Motors, Rockwell International and TRW. But lately BAX has been expanding more heavily into ocean freight and logistics management.

“It’s not enough to be able to say we can just do air,” said analyst John Pincavage at SBC Warburg Dillon Read.

Customers today expect delivery companies to manage as many functions as possible, including organizing shipments of raw materials to factories around the world, managing the inventory, and shipping finished goods to stores, he said.

DSL, with dual headquarters in South Gate and Hong Kong, is involved in ocean freight forwarding, contract distribution and logistics warehousing. It has major operations throughout the Pacific Rim--including a 16-acre terminal just outside the San Pedro port.

DSL specializes in trade routes between Asia and North America, but also ships to and from Latin America and Europe. Its 1996 revenue was about $180 million.

The acquisition “is part of BAX Global’s strategy to expand its service offerings for its customers and significantly increase its presence in the growing ocean freight market,” said Malcolm Heath, a BAX senior vice president. BAX is the operating unit of Pittston Burlington Group.

DSL gives BAX “one more arrow in its quiver,” said analyst Pincavage.

It is the latest in a string of acquisitions for BAX, one of the world’s biggest freight forwarders and logistics companies with annual revenue of about $1.6 billion and 7,300 employees at 500 offices in 119 countries.

In September, the company purchased Cleton & Co., a Dutch logistics, warehousing and distribution services firm, and the remaining 50% of a South African joint venture.

In October, the company changed its name to reflect its broadening range of services and international scope.

Pincavage said the current financial crisis in parts of Asia should have little impact on BAX. Most of the company’s Pacific Rim shipments are imports to the United States and are expected to continue flowing because the strong dollar makes Asian products less expensive here, he said.

BAX said the all-cash acquisition of DSL would be financed through its existing credit facilities and is not expected to dilute 1998 earnings. The transaction is subject to board and regulatory approvals. It is expected to be completed by the end of January, after which DSL will continue to operate as a separate entity.

Pittston Burlington is part of Pittston Co., a Richmond, Va., concern that also owns coal- and gold-mining operations and the security services firm Brink’s Inc.