Since its inception in September 2011, non asset-based 3PL XPO Logistics has made several acquisitions. And that process it has established itself as a player in myriad markets through its growth by acquisition strategy. Yesterday, it took things on the acquisition front to a new level, announcing it plans to acquire Lyon, France-based 3PL Norbert Dentressangle SA for $3.53 billion.
This deal is expected to close during the second quarter. Upon completion of the deal, Hervé Montjotin, chairman of the executive board and chief executive officer of Norbert Dentressangle, will serve as chief executive officer of XPO’s European business and president of the parent company.
Norbert Dentressangle is one of the largest 3PLs in the world, focusing on contract logistics (including e-commerce fulfillment), freight brokerage and transportation, and global forwarding services. It has 662 locations, roughly 42,350 employees and has a “blue chip” customer base comprised of some of the largest global shippers. It serves shippers in the retail, food and beverage, manufacturing, chemicals, agriculture, and e-commerce sectors, with its largest customer accounting for less than 4 percent of total revenue. The company had $5.5 billion in revenue for the year-ended December 31, 2014.
Norbert Dentressangle will provide XPO with access to the largest fleet network in Europe, which is made up of 7,700 owned trucks, 3,200 trucks contracted through owner-operators, as well as access to 12,000 independent carriers, with XPO gaining lane density for about 90 percent of the Eurozone’s GDP-producing regions, added XPO.
XPO cited various benefits of bringing Norbert Dentressangle into the fold, including:
-becoming a top ten worldwide logistics company and leading European outsourced e-fulfillment provider;
-more than tripling its EBITDA run rate to roughly $544 million and increase its revenue to roughly $8.5 billion, which will help it nearly achieve its 2017 targets two years in advance; and
-the complementary service offerings and geographies enabling cross-selling to an established based on multinational companies
In an interview with LM, XPO Chairman and Chief Executive Brad Jacobs said one of XPO’s core philosophies over the last three and a half years is that scale is imperative in order to serve customers most effectively.
“This acquisition clearly gives us the scale to be a global supply chain provider,” he explained. “They came onto our radar when they acquired Jacobson Companies, a company we wanted, last year, as we thought Jacobson would have been a great fit for XPO.”
Jacobs added that XPO and Norbert Dentressangle had met several times in recent months, adding that Norbert Dentressangle was intrigued by becoming part of XPO and a global supply chain powerhouse, which led to the deal coming to fruition yesterday.
“Their service offerings very closely mirrors XPO’s, the geographies are complementary, and the service offerings are very similar,” he said. “They have industry-leading positions in contract logistics and freight brokerage, which are very important parts of XPO’s business. Their contract logistics business brings in $2.8 billion in annual revenue, and we love contract logistics and view it as one of the most attractive parts of the industry because customers value the significant…non-commoditized nature of it and the relationships with customers that span many years.”
Norbert Dentressangle handles a fair amount of specialized logistics in cold chain and chemicals, and also boasts a 96 percent customer renewal rate, and Jacobs said that the companies can now grow its highly successful contracts logistics business on a global scale that XPO has in the U.S.
What’s more, the combined facility space of the two companies will be made up of 129 million square-feet of facility space, with 26 percent of Norbert Dentressangle’s conract logistics revenues generated in the U.S., due largely to its acquisition of Jacobson.
“Within Norbert’s contract logistics business, they have a vibrant and growing business in e-commerce fulfillment, including reverse logistics, as well as its Red Online service, which is a leader in outsourced e-commerce fulfillment in Europe and does about $250 million (Euros) in annual revenue with B2B and B2C customers inside of a $5 billion (Euros) market opportunity,” he said. “We are very big on e-commerce in our U.S. operations, and we are excited about the growth potential in Europe.”
On the freight brokerage side, Norbert’s non asset-based brokerage business generates more than $1 billion (Euros) annually. From XPO’s perspective, Jacobson said this represents a huge opportunity to take XPO’s best-in-class proprietary Freight Optimizer technology and “turbocharge” the freight brokerage growth through carrier sourcing and customer service in Europe, and also share best practices, too.
When asked about potential future acquisition activity in Europe, Jacobs said that there are companies on the radar in Europe that one or both of the companies already were looking at as acquisition targets.
“We are very excited about the acquisitions and companies Norbert has been looking at,” said Jacobs. “Some of them we already knew about, and some we did not. The companies on the list could be very complementary…and help to serve customers better, with more services and density and more geographies.”
Evan Armstrong, president of supply chain consultancy Armstrong & Associates, described this deal as an acquirer being acquired by the other acquirer.
“This is another mega deal,” he explained. “Just as XPO comes off of its much smaller $615M acquisition of Value-Added Warehousing & Distribution (VAWD) 3PL New Breed, it drives additional global network scale with the acquisition of Norbert Dentressangle who itself acquired top-three North American VAWD 3PL, Jacobson Companies for $750M in August of 2014. The long term key will be the continued integration of all the pieces.”
About the Author
Follow Robotics 24/7 on Linkedin
Article topics
Email Sign Up
Latest Robotics News
