C.H. Robinson’s acquisition of Prime Distribution Services is a done deal

Following its late January announcement that it planned to acquire North American retail consolidation and value-added warehouse services provider Prime Distribution Services, from Roadrunner Transportation, for $225 million, Minneapolis, Minn.-based global logistics services provider and freight forwarder C.H. Robinson recently announced that the deal is now official.

C.H. Robinson officials said that with Prime now officially in the fold—and set to be integrated into the company’s North American Surface Transportation division—this acquisition will expand its retail consolidation business while also providing more scale, capabilities, and expertise to its service portfolio. And they added that this acquisition is expected to be slightly accretive to earnings in 2020.

“We are excited about the combination of Prime and C.H. Robinson,” said Bob Biesterfeld, Chief Executive Officer of C.H. Robinson, in a statement. “We welcome our new colleagues at Prime to the team, and we look forward to the work we will do together to provide excellent service to our combined set of customers and carriers.”

In an interview, Mac Pinkerton, President of C.H. Robinson’s North American Surface Transportation division, said that this acquisition represents a continued investment into the company’s core services, explaining that over the past several years the company continues to see both an increase in demand and growth in its own retail consolidation services.

“As consumer demand has changed, so have retail requirements to meet those demands,” said Pinkerton. “We want to make sure we provide our customers with additional value-added services that create a strategic advantage in delivering to those retailers. Prime brings capabilities and synergies for our North American Surface Transportation Business and really allows us to provide that additional advantage for our customers. Prime is a high quality growth company that brings both scale and value-added warehouse capabilities…and bring value-added services to our existing [portfolio], including distribution, fulfillment, and inventory management capabilities.”

In terms of what this deal brings to the table regarding customer benefits, Pinkerton pointed to how the changing demands of consumers are impacting how retailers respond to the ever-changing retailer requirements, which, he said, can be overwhelming, especially when working with multiple retailers across the country or globe. And he added that maintaining compliance within these rules requires a strategic approach, with retail consolidation fitting into that.

“There are increased compliance standards and increased pressure on suppliers, forcing them to evaluate their supply chains, and retail consolidation generally is the [way] to get products when and where they need to be on time and in full [OTIF],” he said. “That with C.H. Robinson’s technology and fulfillment and warehousing capabilities really enable us to deliver for our customers and help them meet those time-definite retail standards. The combination of those things helps suppliers across the industry meet those compliance standards, and OTIF scores of those retailers keeps the retailers’ cash while managing inventory to the right quantity at the right location at the right time. That ultimately meets consumer demand and helps customers to really gain control of their landed costs and improve their business and create a strategic advantage over their own competitors.”   

Addressing how prime will be meshed into C.H. Robinson, Pinkerton said there are meetings this week between the companies that are focused on developing a full integration strategy. At its core, he said there are two distinct consolidation networks, with many synergies between the two, and there are a lot of opportunities to bring those together to meet those synergies and focus on organizational growth.

“This is really a plan focused on growth, and we don’t anticipate any large workforce reductions relative to this,” he said. “We do anticipate optimizing the customer base and the freight flows of the business that we have collectively. Between the two we can always provide a better solution than what customers are experiencing today, and that is really what it is all about. We are integrating these two businesses, in order to provide a seamless customer experience.”