MHS Global and Fortna to Merge, Forming Materials Handling Multinational

Consolidation is continuing among supply chain automation providers, with MHS Global announcing yesterday that it is merging with Fortna Inc. to form a multi-billion-dollar multinational providing parcel, warehousing and distribution, and lifecycle services. The companies said the combination of MHS's automation and Fortna's operational optimization software will serve the end-to-end needs of logistics operations.

“MHS has built its reputation over the past 20-plus years by being a reliable and committed partner while expanding our capabilities and taking a progressive, tech-forward stance to deliver new products and solutions,” stated Scott McReynolds, CEO of MHS. “Combining with Fortna will allow us to accelerate our collective efforts on all fronts, to the benefit of our customers, employees, and suppliers.”

Louisville, Ky.-based MHS supplies materials handling automation, software, and systems integration services for fulfillment, distribution, and logistics operations. The company provides sortation robots, project engineering, conveyors, and other hardware and software.

MHS, which has about 3,000 employees across North America, Europe, and Asia, credited the growth of e-commerce and automation for enabling its expansion. The company said it has a global installed base of over $6.5 billion for parcel, distribution, and fulfillment projects of all sizes with businesses of all sizes, including third-party logistics (3PLs) providers and outside integrators.

“Our typical project has four to five partners,” an MHS representative told Robotics 24/7 at MODEX 2022 last month. “That includes conveyors, flexible AMRs [autonomous mobile robots], and upper level controls, with hundreds of APIs [application programming interfaces].”

MHS, Fortna tout complementary offerings

The need for improved throughput and faster execution has increased demand for automation, advanced operating software, and services, said MHS and Fortna. They added that their complementary products and services, as well as their industry partnerships, will benefit logistics customers.

The duo said their offerings include parcel, cross-docking, conveyance, and sortation capabilities combined with orchestration and optimization software and advanced automation that will drive greater efficiencies and cost savings.

“Fortna has been a trusted advisor driving competitive advantage for our clients as they build direct-to-consumer models, increase service levels, and enable a lower cost to serve,” said Rob McKeel, CEO of Fortna. “The combination with MHS will enable the model to scale with our clients globally and allow the combined company to drive further innovation in operating models, software, and automation.”

Atlanta-based Fortna said it has partnered with leading brands to transform their distribution operations to keep pace with digital disruption and growth objectives. Known worldwide as “The Distribution Experts,” the company claimed that it it designs and delivers intelligent systems using the FortnaWES software to optimize fast, accurate, and cost-effective order fulfillment.

Fortna added that its staff and proprietary algorithms and tools can ensure optimal operations design and material and information flow. The company supports network strategy, distribution center operations, material handling automation, supply chain systems, warehouse software design and implementation, and a suite of lifecycle services and support.

THL to remain majority owner

MHS and Fortna are already part of the investment portfolio of Thomas H. Lee Partners L.P. (THL), a private equity firm investing in middle-market growth companies. Since 1974, THL has raised more than $30 billion of equity capital, invested in 160 companies, and completed more than 500 add-on acquisitions representing an aggregate enterprise value at acquisition of over $210 billion.

THL will remain the majority owner of the combined company, while a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) will acquire a “significant” minority stake to support the combination.

“We look forward to working with the talented management teams and employees of Fortna and MHS as we continue to drive excellence in logistics automation,” said Jim Carlisle, managing director at THL and head of both Technology & Business Solutions and the THL Automation Fund. “Automation solves industrywide challenges such as labor shortages and helps customers meet escalating demand.”

Carlisle will serve as board chairman of the combined company. Upon closing, McKeel will become the CEO, and McReynolds will become the president of the combined entity.

“MHS and Fortna are leading players in their respective industries, and their combination will create a significant operating platform for the company to deliver automation solutions to customers on a global scale,” said Hamad Shahwan Al Dhaheri, executive director of the Private Equities Department at ADIA.

Established in 1976, ADIA is a globally-diversified investment institution that prudently invests funds on behalf of the government of Abu Dhabi through a strategy focused on long-term value creation.

This transaction is subject to customary closing conditions and regulatory approvals. Terms of the transaction were not disclosed.

Morgan Stanley & Co. and RBC Capital Markets LLC served as financial advisors to MHS. Baird served as financial advisor to Fortna. Kirkland and Ellis served as legal advisor, respectively, to both companies. J.P. Morgan Securities LLC will lead the debt financing for MHS.

J.P. Morgan Securitiesand Gibson, Dunn & Crutcher LLP served as financial and legal advisors, respectively, to ADIA’s subsidiary.