Kuehne + Nagel sells significant UK contract logistics operations to XPO

  • Divestment of drinks logistics, food services and retail & technology businesses to XPO Logistics
  • Unchanged high commitment to the Group’s scalable leverage areas in the UK

Kuehne + Nagel announced this morning (09-Mar-2020) that it had entered into a definitive agreement to sell a major part of its UK contract logistics portfolio to XPO Logistics.

The scope of the transaction includes the Swiss group’s operations across drinks logistics, food services and retail & technology businesses. In 2019, the operations combined revenue topped CHF750m (€674m). At this stage, it is unclear how many of the 7,500 employees in the operations will be retained over the long-term by XPO.

Dr. Detlef Trefzger, CEO of Kuehne + Nagel International AG, commented: “One year ago, we first announced the strategic review of our contract logistics business to improve profitability and focus on our core, scalable solutions. We have now reached a major milestone in this effort, having secured an agreement to sell significant non-core assets in the UK. With XPO Logistics, we are pleased to have found a good new home for our customers and employees.”

Kuehne + Nagel’s total revenue for its ‘Great Britain’ business in 2019 was CHF2.1bn (€1.9bn). The company’s announcement of the sale stated that it “remains highly committed” to “the UK across all business units, including contract logistics.” The implication is that it will focus on what it calls ‘scalable leverage’, essentially a strategy that will see it focus on high value-added services to the aerospace, government and pharma industry verticals in the UK. Post-deal, this is likely to focus on forwarding services for clients on this sector.

No financial details will be disclosed by either party to the sale, which remains subject to regulatory approvals. Should those be received, the deal is expected to close in the second half of the year. The deal raises several important questions, notably, what does this mean for XPO’s recent statements that put essentially all operations, save US LTL, on the chopping block? To what extent, if any, is this move driven by Brexit and the various perspectives it signals from both K+N and XPO about the future of the UK market? Will, and how, might the UK’s major domestic-only player Wincanton react?

Ti’s coverage of today’s announcement will continue. Make sure to check Ti’s Logistics Briefing Live service for the latest coverage.

Source: Transport Intelligence, March 09, 2020

Author: Transport Intelligence