By Robbie Whelan
XPO Logistics Inc.'s agreement to buy French freight forwarder
Norbert Dentressangle SA for $3.53 billion caps a recent run of
large deals in the logistics space. Whether it will result in a
significant industry consolidation wave is another question.
The deal was Greenwich, Conn.-based XPO's second major
acquisition since September, when it took in contract logistics
provider New Breed Holding Co. for $615 million. FedEx Corp. has
announced a combined $6.2 billion in deals since January, including
plans to buy Pittsburgh-based third-party logistics provider GENCO
and Dutch package-delivery company TNT Express NV.
Despite the big-ticket deals, M&A in the arena has actually
fallen off dramatically over the past two years--and 2015 deal
volume is on pace to decline further. According to Dealogic, there
were 248 M&A deals in the transportation sector in 2013, with a
combined value of $29.9 billion. That compares with 195 deals worth
$13.8 billion in 2014.
This year through the end of April, only 62 deals have been
announced, with a combined value of $4.2 billion, putting 2015 on
track for a year-over-year decline.
Much of the 2014 deal-making was concentrated in the maritime
shipping industry, which has been plagued by overcapacity, and
trucking , which is highly fragmented and dominated by small
fleets, according to a recent PricewaterhouseCoopers analysis. The
report attributed the general slowdown to a decelerating China
economy and a strong U.S. dollar inhibiting Asian buyers of
American firms, among other things.
Recently, it's mainly smaller companies with fewer assets that
are up for sale--and being snapped up in a flurry of deals with
values between $5 million and $200 million over the past two
years.
This could explain the lackluster deal values, says Daniel
Herron, who runs a boutique investment bank specializing in
logistics company transactions, Herron & Associates LLC.
In January, the Journal reported that E2open Inc., which makes
supply-chain management software and had a market capitalization of
roughly $165 million, had hired bankers to explore a sale.
"There's some smart money that's gotten into the transportation
and logistics space, especially with asset-light companies," Mr.
Herron said. "There's a big need for effective software and
technology in the space, to allow smaller companies to compete with
the larger ones."
Write to Robbie Whelan at robbie.whelan@wsj.com
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