This story appears in the Aug. 11 print edition of Transport Topics.
European transport and warehouse operator Norbert Dentressangle said it struck a $750 million cash deal to acquire Jacobson Cos., a Des Moines, Iowa-based logistics services provider.
The purchase by the Lyon, France-based firm is the latest in a series of high-profile acquisitions involving trucking and logistics firms. It could, according to some industry analysts, be a sign of things to come as European and Asian companies eye investing in North American transport companies.
“We are very pleased to become part of Norbert Dentressangle,” Tony Tegnelia, co-president and chief operating officer of Jacobson, said in a July 31 statement announcing the deal between the French company and Oak Hill Capital Partners, an investment firm that has owned Jacobson since 2007.
Founded in 1968, Jacobson provides warehousing and distribution services, contract manufacturing, labor staffing and dedicated contract carriage services. The company ranks No. 24 on the Transport Topics Top 50 listing of the largest logistics companies.
Its gross revenue was $924 million in 2012 (net revenue was $571 million), and in 2013 gross revenue was $800 million, company officials said.
In 2013, Jacobson sold its international logistics business in Asia to former CEO Brian Lutt as part of a plan to refocus on domestic businesses.
Norbert Dentressangle operates the largest fleet of trucks in Europe but has a very limited presence in the United States. In 2010, the company acquired the international freight forwarding and customs brokerage business in the United States and China from Schneider Logistics. Norbert Dentressangle generates about $30 million in annual revenue from air and sea transport in the United States.
Hervé Montjotin, CEO of Norbert Dentressangle, said the addition of Jacobson will boost the company’s overall revenue by more than 15% this year to about $6.8 billion.
“It’s a very aggressive move,” Richard Armstrong, chairman of Armstrong & Associates, a logistics research firm in Stoughton, Wisconsin, said of the Jacobson purchase.
“It’s also something that is very necessary,” Armstrong said, noting that most of Norbert Dentressangle’s European competitors already have operations in North America.
“Not being in the U.S. obviously is a real limitation,” Armstrong said. “Buying Jacobson gives them value-added warehousing and a fair-sized trucking network.”
Industry analysts say they expect to see more moves like the one Norbert Dentressangle is making.
“The U.S. is becoming a more attractive place to invest,” said Michael Portnoy, an analyst with the industrial products practice at PricewaterhouseCoopers in New York.
A global review of mergers and acquisitions by PwC US identified 51 transportation and logistics transactions worth $20 billion in the second quarter, compared with 39 deals worth $16.6 billion in the same period in 2013.
“We expect volume to stay at a fairly robust level this year,” Portnoy said in an interview with Transport Topics last week.
Cathy Roberson, a logistics researcher in Atlanta for London-based Transport Intelligence Ltd., said she also expects to see more acquisitions and cross-border partnerships among international transport operators.
“What’s driving this is the improving economic conditions here in the U.S. and the growth of industries such as automotive, oil and gas and health care,” she said. “E-commerce is also of great interest.”
In buying Jacobson, Roberson said, the French company may be looking to replicate its success in handling online sales for British fashion retailer ASOS and other companies like retailers Marks & Spencer and House of Fraser, while also providing Jacobson’s U.S. customers with international shipping services.
When completed, the United States will be the third largest market for Norbert Dentressangle, after France and the United Kingdom.
Montjotin said Jacobson management will remain in place, and Des Moines will become the North American headquarters of Norbert Dentressangle.
Norbert Dentressangle operates more than 8,000 tractors at 182 locations in 13 countries. About 16% of its trucks are used in dedicated fleets. The company also operates warehouses at 281 sites in 16 countries.
Both companies do business with shippers in food and beverage, chemical, consumer packaged goods, industrial and manufacturing industries.
Despite the similarities, Satish Jindel, the principal consultant with SJ Consulting Group in Sewickley, Pennsylvania, said recent mergers between European and North American transport firms have a mixed record.
“Going to the U.S. is very different than going from France to the United Kingdom,” Jindel said. “It’s more like going to a different planet.”
Jindel cited the purchase of Airborne Freight Corp. by Germany’s Deutsche Post DHL, the acquisition of Houston-based freight forwarder EGL by the Dutch firm Ceva Logistics, and the purchase of BAX Global by Deutsche Bahn AG as examples of deals that did not meet expectations because of service problems or a loss of customers.
“The mistake is not in buying a company in America. It’s how it proceeds,” Jindel said. “The people put in charge and the changes they make will determine how well it goes.”