Agility and GXO buying spree adds to merger wave

Ti’s own M&A database for the global logistics sector reveals which sectors have been most popular for acquisitive companies over the past twenty five years.

The pace of acquisitions in the logistics sector continues to be intense. In the airfreight and air transport services sector the latest example is Kuwait’s Agility and its subsidiary, National Aviation Services (NAS) of Kuwait, offer for the UK based aircraft handling company, John Menzies plc. Late on February 21st, the board of John Menzies said that it had reconsidered a “final proposal” from NAS offering a higher price of 608 pence per share and that it had decided “unanimously to recommend” the offer to its shareholders. This follows several weeks of negotiation between the two companies over what was an unsolicited approach. NAS initially offered 460 pence a share.  

The new price values John Menzies plc at £560m, which is around twice its stock market valuation over the past 12 months. The company has been badly affected by the collapse in air transport across the world, however, even before the COVID-19 panic, John Menzies plc stock was priced at around 400 pence.

For Agility this is clearly a new focus for expansion after the sale of its ‘Global Integrated Logistics’ forwarding business to DSV. NAS has been expanding aggressively in not just the Middle East, but also in India and Africa. Adding John Menzies with its exposure to large complex airports in Europe, North America and Australasia would be an important step in NAS’ corporate strategy.  

Another major acquisition that seems to have been just agreed upon is different in character. In what seems to be a welcome approach, GXO has bid for the UK 3PL  Clipper Logistics. GXO is the now divested contract logistics business of XPO.

GXO has offered “690 pence in cash; and such number of new GXO shares as would imply a valuation of 230 pence based on the trailing GXO 3-month volume-weighted average price”; or in other words a mix of cash and GXO stock. This values the company at over £900m, a significant premium on its stock market valuation. Clipper is a good example of an entrepreneurial logistics service company. Starting out with one truck the company grew explosively by specialising in e-retail services. This has underpinned its results over the past couple of years, driving its share price up. The offer from GXO is full, but not wildly, over-priced if its share price is a reference. It very much seems that GXO is looking to augment its e-retail business.

Source: Transport Intelligence, 22nd February 2022

Author: Thomas Cullen