NEWS\\\


XPO Logistics is to buy a two thirds stake in French-based forwarding and logistics operator Norbert Dentressangle from its owning family and will launch a tender offer for its remaining shares,


it


was announced on 29 April. The deal, with a total


transaction value of about €3.24 billion including €1.08 billion of net debt, would make XPO Logistics one of the top logistics companies in the world with annual revenue (in US dollar terms) of around $8.5 billion. The US operator has said that the Norbert Dentressangle name (widely regarded as one of the difficult to spell and


pronounce in the industry) would be rebranded as XPO Logistics, but Norbert Dentressangle chief executive Hervé Montjotin will be chief executive of XPO’s European business and president of the parent company. Although Norbert


Dentressangle has interests in the freight


forwarding sector in the


US, China and elsewhere, analysts said that the attraction to XPO was the French firm’s extensive interests in European logistics. Lyon-headquartered Norbert Dentressangle has 662 locations and about 42,350 employees. The UK is its second-biggest area of


activity, aſter France, boosted by its acquisition in 2010 of TDG and a number of other UK operators. Norbert Dentressangle has


extensive logistics operations and forwarding interests through its Sea & Air arm. As recently as 2014, it itself acquired a US forwarding company, Des Moines-headquartered Jacobson, described at the time as one of the largest value-added warehousing


Issue 4 2015 - Freight Business Journal


Goodbye to one of the biggest names in European logistics


3PL providers in North America annual turnover of $800 million. In a statement, XPO said


that the deal would increase XPO’s global freight


forwarding


revenue to approximately $425 million annually and provide greater access to Euro-Asia trade lanes. It also expects the added volume to improve its air and sea transportation buying rates for its customers.


XPO Logistics chairman


and chief executive Bradley Jacobs, said: “This is a defining moment in the growth of XPO. Our planned acquisition of Norbert Dentressangle will catapult XPO to a top ten global logistics company.” It would more than triple earnings, but while the acquisition of Norbert Dentressangle is a major leap forward, “we’re still in the early


3


innings of our long-term growth plan,” he added. At ND, Hervé Montjotin, said:


“By joining XPO, we will become part of an organization that shares the ambition that has guided us since the creation of Norbert Dentressangle 36 years ago: to become a global partner able to effectively support our customers in the management of their supply chains..”


FLUSH WITH CASH AND OVER HERE


XPO’s move for Norbert Dentressangle came as a bit of bolt from the blue for most in the industry though, with hindsight, perhaps it shouldn’t have been. The avowed strategy of the US company’s boss, Bradley Jacobs, is to turn XPO into a $9,000 billion-a-year company in revenue terms by 2017, points out John Manners-Bell, chief executive of analysts, Transport Intelligence. “However, the fact that XPO came to Europe and went for such a big company is a surprise,” he told FBJ. “We had Norbert Dentressangle down as one of the consolidators themselves; aſter all, they have only just taken over Jacobsen in the US.”


A couple of other factors also prompted XPO to make its move for


Norbert Dentressangle and for the French company to sell. It has now emerged that there were succession issues at Norbert Dentressangle, says Manners-Bell. Another was the strong dollar against the Euro, which made Norbert Dentressangle even more attractive to a US purchaser. Don’t rule out other US firms buying in Europe, he adds. “There


are a lot of big companies with cash, which they can return to shareholders or they can be a little more creative.” FedEx’s move for TNT is one such example and it is possible that is creating a ‘me too’ effect. For Manners-Bell, the XPO-Dentressangle tie-up “is definitely part of the same trend.” XPO is a well-funded company, he continues; among its investors


is the Singapore Sovereign Wealth Fund, typical of the sorts of groups that are looking for better-paying homes for their money. Manners-Bell’s analysis is that ambitious XPO, which wants to


increase its profits to $757m a year by 2017, came a little too late to the market to buy in the now rather over-heated intermodal and less- than-trailerload segment of the US domestic market and so has taken the plunge with a European acquisition. Expect further acquisitions in Europe by US firms, including


possibly itself, he adds. “Bear in mind that Norbert Dentressangle itself wasn’t a finished article; the company was looking at acquisitions in its own right, for example in Germany.” It is possible that XPO might take over a few of the French firm’s unfinished projects, he says. Acquisition of freight forwarders – as opposed to transport and


logistics firms – could also be a part of its strategy. Neither firm was particularly strong in the sector, although Norbert Dentressangle had acquired US forwarder Jacobsen and others in Asia, giving it a reasonable turnover in the sector, though probably not enough to make it a top 30 player. XPO also has some forwarding turnover, so there is certainly scope to grow if the company so chooses.


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