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Issue 7 2015 - Freight Business Journal


in the US, many more times than DSV


does in that country, and it will also help the Danish company realise an ambition to become a major player in the US truck brokerage business. UTi would also bring a strong presence in South Africa, Germany and China, and it also strong in key industrial verticals such as automotive and healthcare. Another major attraction of


the deal, said Anderson, was the chance to bring in new skills and competencies and to improve productivity by combining IT systems and offices. While unwilling to provide


specifics of which offices might be merged ahead of the formal signing of the deal, Anderson told FBJ that “it makes no sense to have two offices” in similar locations. Likewise, no decision had been taken on branding or management of the combined


business, said Anderson. He added that UTi had a strong although


network, it did not


always have the volume to fill it, which is why the company had been struggling to turn a profit. DSV said UTi shareholders a


would gain 50% premium


compared to the closing price on 8 October. Competition authorities would also have to be satisfied in the US, Europe, China and elsewhere, but DSV’s management did not anticipate any problems.


The big just got bigger – XPO to buy Menlo parent Con-Way


US-based XPO Logistics, recent purchaser of French-owned Norbert Dentressangle, is now buying fellow US transportation concern, Con-Way, including its Menlo Logistics arm. The latest deal will make XPO


the second-largest less-than- truckload provider in North America. Con-Way operates 582 locations


and has 30,000 employees, with estimated revenues of $5.7 billion and before-tax earnings of about $528m. The total transaction is valued at around $3bn, including $290m of net debt. The combined company will employ about 84,000 people at 1,469 locations in 32 countries. XPO Logistics chairman and


chief executive officer Bradley Jacobs described Menlo


as


“another crown jewel in this transaction...an asset-light top 30 global contract logistics provider.” He added: “Menlo serves blue chip contract logistics customers in verticals such as high tech, healthcare and retail, which complement the verticals we serve at XPO.” The merged company will cover virtually all the US and the


regions that produce 90% of the Eurozone’s GDP. The addition of Con-Way would also boost XPO’s cross-border services between the US and Mexico. Bradley Jacobs predicted that


the Con-Way purchase would nearly double XPO’s


full year


earnings to $1.1bn. With the transaction expected


to be completed in October, XPO would immediately begin work on a plan to improve Con-Way’s operating profit by $170m to $210m over the next few years. This would be achieved by using the combined companies’ purchasing power, using XPO’s technology infrastructure to reduce


Con-Way’s, largely


outsourced, $227m spending, and integrating the two freight brokerage platforms. XPO announced that it would


buy a two thirds stake in French- based forwarding and logistics operator Norbert Dentressangle from its owning family and launch a tender offer for its remaining shares on 29 April. The deal, with a total


transaction value of about €3.24 billion including €1.08 billion of net debt, has already made XPO


Logistics one of the top logistics companies in the world with annual revenue of around $8.5 billion. The purchase of Norbert Dentressangle’s 662 locations and 42,350 employees greatly boosted XPO’s presence in Europe, including the UK where the French company had extensive operations. John Manners-Bell, of transport consultants Ti pointed


out,


however: “The Menlo acquisition is


not really about freight


forwarding. Menlo sold its freight forwarding arm to UPS in the early 2000s. Primarily the acquisition is to increase its US road freight (LTL) presence and to a lesser degree its global contract logistics capabilities. In Europe, Menlo does not have substantial operations outside Benelux and some in UK and Germany, although it has been growing quickly especially in the e-commerce sector. It has a significant presence in Asia, which will be of use to XPO as it is not particularly strong in the region. However its real strength is in the US where it will add its contract logistics capabilities to those acquired through Norbert Dentressangle.”


MORE MERGERS TO COME, SAYS TI EXPERT


John Manners-Bell, of transport consultants Ti expects to see more mergers and acquisitions in the coming months. The global economy (particularly Europe) is forecast to improve, giving companies more confidence to invest in new markets and sectors. At the same time, supply chains are reaching into untapped markets in the developing world, increasing the need for global logistics companies to support their multi-national clients. But he adds: “The reverse is also happening. Asian logistics companies are looking to expand their networks into Europe and North America to support the expansion of their customers.” At the same time, the emergence of a powerful middle class in Asia and Latin America (and Africa to a lesser degree) has created more demand for


higher value consumer goods, which in turn require a higher level of sophistication of supply chain management. Increased near-sourcing will mean that logistics companies will have to develop their capabilities in low cost manufacturing locations such as Turkey and North Africa for Europe and Central America for the US and Canada. They are also increasingly looking to expand into niche sectors such as healthcare/pharmaceutical where they can leverage their value adding capabilities and networks. Above all, John Manners-Bell concludes: “Major corporations and investment institutions such as private equity companies are sitting on large cash piles – M&A activity is one way in which they can achieve better returns for investors.”


///NEWS IJS sells out to Gefco


GEFCO Group is to acquire the Netherlands-based air and sea forwarder IJS Global following an agreement with the private equity fund Nimbus. Founded in 2004, Amsterdam-


headquartered IJS has around 500 employees and operations in 16 countries including the UK Australia, China, South-East Asia and the US. Its turnover was €160 million in


2014. Its business sectors include pharmaceuticals, humanitarian relief,


high-tech, will oil


aerospace and fashion. The deal


be & gas, effective


aſter completion of regulatory formalities. Gefco, which started life


as a subsidiary of French car markers Peugeot-Citroen but is now 75% owned by the Russian railways, said the two businesses’ expertise, geographic networks and customer portfolios would complement each other.


As well as improved


geographic coverage, Gefco said the acquisition would further enhance its expertise in intercontinental air and sea freight forwarding, including multimodal transport, storage, Customs and tax representation. Its chairman Luc Nadal said: “The acquisition of IJS Global is fully in line with our development strategy. This operation will allow GEFCO to enhance its position as the preferred partner of international industrial companies. Our mission is to bring value to our customers’ supply chains while enabling them to achieve greater growth and competitiveness.” The combined group will


operate in over 150 countries and connect over 350 destinations, thereby offering its strategic agents and suppliers new trade opportunities. IJS chief executive, Sjoerd Van Loon, CEO of IJS Global,


said: “We are delighted to join the GEFCO Group, a global leader in high value-added logistics. The networks of both companies are complementary and will significantly contribute to our service offer in all of the world’s key markets. We are looking forward to combining the knowledge and experience of our teams to help us grow.” John Manners-Bell, of


consultants Ti commented that Gefco’s acquisition of IJS confirms a predicted increase in merger and acquisitions: “Gefco will extend its European network and consolidate its position in China, South-East Asia, and the US and expand its customer portfolio, particularly in the sectors of pharmaceuticals and high-tech products. It will help to diversify its operations from a French and automotive bias and also provide greater reach for its automotive clients.”


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