Geodis set to acquire OHL in latest example of global 3PL M&A

The most recent in which could be described as a series of large-scale global 3PL (third-party logistics) acquisitions was announced today, with Geodis, a $6.1 billion France-based 3PL saying it has entered into an agreement to acquire Brentwood, Tennessee-based $1.3 billion OHL (formerly known as Ozburn Hessey Logistics).

The purchase price is said to be roughly $800 million, although neither company publicly disclosed that figure. Geodis officials said that this deal will be closed upon completion of the usual regulatory approvals.

“We are proud to welcome the customers and employees of OHL to GEODIS and to provide our global customers with OHL’s expertise and presence in the North American market” said Marie-Christine Lombard, CEO of Geodis, in a statement. “Likewise Geodis offers a second to none Global footprint for North American corporations and the clients of OHL seeking to grow internationally.”

This deal comes on the heels of other large-scale 3PL deals, including non asset-based 3PL XPO Logistics’ recent acquisition of Lyon, France-based 3PL Norbert Dentressangle SA for $3.53 billion, which was made official in June and global 3PL Kuehne+Nagel’s announcing in June that it entered into an agreement to acquire ReTrans Inc., a Memphis-based provider of multimodal transportation services for an undisclosed amount. Another notable deal is the acquisition of Genco by FedEx that was completed earlier this year.

OHL was established in 1951 and operates more than 120 North America-based value-added distribution centers with more than 36 million square feet of flexible warehouse space. It provides shippers with various supply chain management services, including transportation, warehousing, customs brokerage, freight forwarding, and import and export consulting services. OHL has more than 8,000 employees and serves shippers in various sectors, including: specialty retail, manufacturing, apparel, electronics, healthcare, food and beverage, an consumer packaged goods.

OHL is owned by Welsh, Carson, Anderson & Stowe, a private equity firm. In 2008, Ozburn-Hessey Logistics and all of its acquired companies rebranded as OHL. The branding project was undertaken to meld the multiple divisions, companies and brands that were parts of OH Logistics, according to Evan Armstrong, president of West Allis, Wisc.-based supply chain consultancy Armstrong & Associates.

“Companies that had been acquired had specialized service offerings, management teams, customer relationships and were well-known within their geographies,” he said. “However, none of the companies had an established international brand. OHL intended to establish itself as a strong international supply chain management solutions provider. OHL provides logistics solutions for several large companies including Arch Chemicals, Coca-Cola, Land O’Lakes, Red Bull, Samsung, and Starbucks. Welsh, Carson, Anderson & Stowe, has reconfigured top management over the last few years to reflect OHL’s push to 3PL globalization. In October 2012, OHL sold off its Turbo Logistics freight brokerage to XPO Logistics.”

Geodis has a presence in more than 120 countries through its network partners and subsidiaries, including Geodis Logistics (contract logistics), Geodis Wilson (freight forwarding), and Geodis Supply Chain Optimisation, which grew out if its December 2008 acquisition of IBM’s internal global logistics operations, Distribution and Express and Road Transport . Armstrong said that most of the company’s revenue is European-based and represents 81 percent of its total revenue, with France alone accounting for 60 percent alone.  Geodis has more than 120,000 customers and 30,000 employees. It is owned by SNCF Logistics, which is a subsidiary of SNCF Logistics, the freight services division of French rail operator SNCF Group.

Armstrong told LM that this deal is yet another example of the big getting bigger.

“The combination of $6.1 Billion Geodis and $1.3 Billion OHL makes it the eleventh largest global 3PL based upon our 2014 Top Global 3PL list ranked by gross revenue (and taking into account XPO’s recent acquisition of Norbert Dentressangle which makes it seventh using the same methodology),” he said. “At an $800 million purchase price, we have now matched 2007 for the most acquisitions with prices over $100M at nine. Welsh, Carson, Anderson & Stowe has been shopping OHL for some time. This acquisition gives Geodis a strong value-added warehousing presence in the U.S. which it was lacking. It also helps Geodis tap the U.S. 3PL market which is growing faster than Europe’s. The combined operation will have just under 70 million square feet of warehousing space globally which it can cross-sell with Geodis Wilson’s and OHL’s international and domestic transportation management offerings. Interestingly, it means that OHL is now owned by Geodis, which is owned by the French Government. This is the world of Global Third-Party Logistics where privately held and publicly traded companies compete with state-owned enterprises.”

John Manners-Bell, Chief Executive of London-based Transport Intelligence wrote in a research note that Geodis has long wanted to expand in the U.S as part of an ambitious global development plan.

“Although the US dollar has been strong which has made any potential acquisitions more expensive for European companies, Geodis’ management has obviously taken a long term strategic view of the acquisition and the importance of the U.S. market,” he observed.