Kuehne + Nagel has bought Apex International Corporation, a freight forwarder with a strong position in airfreight in China and Asia Pacific. Neither party has disclosed the “transaction details”, however, it is reported in the press that K+N paid $1.5bn for the forwarder. It seems that the agreement to buy the company from the private equity company MBK Partners is structured in the usual way, with MBK retaining a small proportion of equity for a limited period. It also appears that the management of Apex will retain a proportion of the equity.
Apex International Corporation is described by K+N as having “approximately 1,600 employees, …generates yearly turnover in excess of CHF*2.1bn. In 2020, the company handled total air freight volume of approximately 750,000 tonnes and sea freight volume of 190,000 TEU”.
These numbers would suggest that the acquisition will make K+N one of the largest airfreight forwarders, rivalling DHL GFF. However, it is notable that K+N commented in its statement around the purchase that Apex will “continue to operate separately within the Kuehne + Nagel Group.”
This complicates the commercial logic of the deal, with less opportunity for reductions in cost through economies of scale either in buying or Information Technology.
Speculation around the sale of Apex International Corporation has been current for some time, largely due to its ownership by a private equity company. The motivations behind K+N’s purchase is more complex. The sale of a large part of its contract logistics business in Europe recently suggested that the Swiss-based logistics provider was intent on re-orientating its business. The purchase of Apex demonstrates that K+N is looking to concentrate on forwarding but increase its exposure to the Asia Pacific region. This is not very surprising in that South East Asia offers significant growth prospects. However, the degree to which this deal is exposed to airfreight is notable. Of course, K+N has a significant airfreight business already, however, the purchase of Apex makes it a leading player which is clearly a statement of confidence in the future of the sector.
One possible problem for the acquisition is the depth of the exposure to China. Until recently this would have been a strength but the politics of China’s relationships with the West could threaten instability in this part of the business.
Source: Transport Intelligence, February 23, 2021
Author: Thomas Cullen
*CHF=€0.94/$1.02
