GEFCO rumoured to be up for sale again

GEFCO Tarot Analytics

A number of press reports are suggesting that GEFCO is to be sold by its two present shareholders.

Articles by Reuters and in French newspapers state that RZD, the Russian State Railway system, and the vehicle manufacturer Stellantis has appointed investment banks in order to find buyers for their shareholdings in GEFCO.

The reports seem credible, however, there is almost certainly more complex issues behind a simple desire to sell. In 2019 there were strong indications that GEFCO was to be floated on the Paris stock exchange, however, this did not take place with rumours implying questions over timing and valuation. Both RZD and what was then PSA Group, now called Stellantis, appeared to be interested in reducing their investments in GEFCO, with the logistics service provider issuing a statement at the beginning of 2019 that the IPO would aim to release “around 35% of the equity of the company” with RZD “considering a reduction of its stake to below 50% of the company’s share capital at IPO” and “PSA Group that still holds 24.96% of GEFCO is considering reducing its stake to below 10%…with the remaining holding subject to a 2-year lock-up period.”

The economic environment that both Stellantis and RZD find themselves in is quite different to 2012 when the Russians bought a majority stake in what had been the logistics subsidiary of the troubled PSA Group. Stellantis, having bought General Motors’ European business is now in the process of merging with Fiat-Chrysler, whilst at the same time transforming the technology of its products. RZD is facing a very different political and macro-economic environment although its initial insight of the importance of the China-Europe rail bridge has proven to be accurate. 

GEFCO itself is also facing a very different competitive landscape. It has been reasonably successful in diversifying away from both its reliance on Peugeot-Citroen derived business and also automotive logistics in general, however, these two sectors are still very important to the company. Half of GEFCO’s business remains in France. Obviously, the company has been badly hit by the COVID-19 crisis, with revenue falling back by almost €1bn compared to 2019. However, the longer-term question that it now faces is how it can re-position itself to benefit from the booming demand seen in other parts of the logistics sector.

Source: Transport Intelligence, June 24, 2021

Author: Thomas Cullen