- XPO is acquiring the majority of Kuehne + Nagel’s non-core logistics assets providing "inbound and outbound distribution, reverse logistics management and inventory management," services in the U.K., according to a press release issued Monday. The deal is expected to close in the second half of this year and both parties have agreed not to disclose transaction details.
- The deal brings XPO 75 of Kuehne + Nagel’s 83 logistics facilities in the country and a blue chip customer base, according to the release.
- Kuehne + Nagel’s U.K. business brought in 500 million pounds ($650 million) in revenue in 2019 and revolves around the e-commerce, technology, and food and beverage industries.
Last year was a challenging one for the freight industry, trucking and logistics in particular, with a lackluster peak season driving logistics players to alter strategies.
XPO announced at the beginning of the year "a review of strategic alternatives, including the possible sale or spin-off of one or more business units." The announcement marked a change in strategy after XPO's years of growth via targeted mergers and acquisitions.
CEO Bradley Jacobs cited the 3PL trading "at well below the sum of our parts and at a significant discount to our pure-play peers" as a key reason for the review. Jacobs said XPO had no intention of spinning off or selling its North America LTL unit.
Kuehne + Nagel’s asset sale is part of an ongoing review and consolidation of the company's global logistics footprint. Currently, the company operates in 36 countries with 345 branches, 5,000 trucks and 7,000 trailers.
"One year ago, we first announced the strategic review of our contract logistics business to improve profitability and focus on our core, scalable solutions," Kuehne + Nagel CEO Detlef Trefzger said in a statement, calling the deal a major milestone in that effort. Kuehne + Nagel will retain control over its U.K. facilities serving aerospace, government and pharma clients as they are among the company's "scalable leverage areas," according to a press release.
In 2019, the company acquired two logistics firms, Jöbstl and Rotra, to bolster overland and cross-docking operations in Austria, Belgium, the Netherlands and Slovenia, a geographic and market segment that has performed well in recent quarters according to executives on the company's Q4 earnings call.
However, after an underwhelming peak season "we refocused again on cost and restructuring of our ongoing restructuring of our contract logistics business," Trefzger said on the earnings call. "You should expect a percent lower contract logistics footprint in the overall portfolio of our activities," he said.