Logistics

GXO snatches up Wincanton , DHL drops DB Schenker pursuit

By Greg Knowler and Keith Wallis

DHL will not pursue DB Schenker , but the forwarder will continue to look for acquisition targets . Gorloff-KV / Shutterstock . com

Merger and acquisition activity and speculation is swirling in the global forwarding sector , with GXO outbidding CEVA Logistics for Wincanton and DHL dropping its offer for one of the hottest companies on the market : DB Schenker .

It took Wincanton ’ s board less than 24 hours to drop CEVA after GXO on Feb . 29 put up a cash bid of £ 6.05 per share , representing a 26 % premium to the offer from CMA CGM subsidiary CEVA that it accepted in January . US-based GXO ’ s bid values Wincanton ’ s existing issued share capital and that to be issued at £ 762 million , with an enterprise value of £ 960 million .

“ The board of Wincanton is pleased that GXO recognizes the very significant value inherent in this business ,” Chairman Martin Read said in a statement March 1 .

It ends a curious acquisition process . On Jan . 19 , CEVA Logistics ’ UK operation appeared to have sealed the deal when its £ 566.9 million bid was both accepted by Wincanton ’ s board and recommended to shareholders . It was by all accounts a generous offer that delivered a premium of 52 % on the company ’ s closing stock price at that time and gave Wincanton an enterprise value of £ 764 million .

But Wincanton ’ s statement indicated that its board recommending that shareholders approve the CEVA bid prompted a “ public offer process ” that resulted in GXO coming forward .

“ The Wincanton directors are pleased that the public offer process , triggered by their recommendation of CEVA ’ s offer on 19 January 2024 , is maximizing value and delivering a significant premium to Wincanton shareholders ,” the company said .

Wincanton provides a range of outsourced and integrated supply chain solutions across the e-fulfillment , grocery and consumer , general merchandise , and public and industrial sectors . The forwarder generated revenue of £ 1.46 billion in 2023 , with underlying earnings before interest , taxes , depreciation and amortization ( EBITDA ) of £ 121.9 million .

‘ Driving value ’

DHL ’ s decision not to pursue a potential acquisition of rival German logistics company DB Schenker leaves Denmark ’ s DSV as the only remaining obvious potential buyer after Kuehne + Nagel ( K + N ) likewise confirmed it would refrain from bidding .

DHL CEO Tobias Meyer said it was important for DHL to see “ a very substantial upside ” when it comes to mergers and acquisitions , indicating that a deal for DB Schenker would not generate the required value .

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“ The larger it gets and the more similar you are in those industries where you don ’ t have [ economies of ] scale ... you just don ’ t have that case ,” Meyer said during DHL ’ s annual results call .

He confirmed DHL would continue to look at deals that would be focused on small and mid-sized acquisitions “ that really create opportunity … to drive value .” Those targets have included Turkish freight forwarding and air freight company MNG Kargo , which DHL acquired last October .

“ We will invest where it makes sense , where we make our business better .”

“ We will invest where it makes sense , where we make our business better ,” Meyer said . “ We will remain very much focused on value creation when it comes to the deployment of capital .”

Deutsche Bahn in mid-December sent out a call for takeover offers for the long-awaited sale of its DB Schenker logistics subsidiary . Those making offers — which analysts expect could top $ 20 billion — were expected to be a list of major global forwarders including DHL Global Forwarding , K + N and DSV .

Meyer ’ s comments came after DHL reported a 13.4 % drop in revenue to 82 billion euros ($ 89 billion ) for 2023 after a record $ 102 billion in 2022 . Earnings before interest and taxes slumped 25 % to $ 7 billion from $ 9 billion in the year prior .

Revenue at the company ’ s global forwarding and freight division fell 36 % last year to $ 20 billion .

email : greg . knowler @ spglobal . com email : keithwallis @ hotmail . com

March 25 , 2024 | Journal of Commerce 35