Ceva Won’t Raise Offer for Wincanton, Ending Bidding War With GXO
GXO is another step closer to taking over U.K. logistics company Wincanton as its rival suitor is pulling out of the race.
Ceva Logistics, the third-party logistics (3PL) subsidiary of ocean freight giant CMA CGM, will not make a competing offer to one-up GXO’s $965 million bid. This offer had already been unanimously recommended by Wincanton’s board of directors Friday.
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When Wincanton first revealed that GXO was interested in acquiring the logistics firm, Ceva had raised its initial offer from $719 million to a “increased and final” total of $767 million. The 3PL is keeping
“It is Ceva’s intention that the increased and final offer will lapse in due course,” Ceva said in a statement. “Ceva felt that the increased and final offer represented a very attractive opportunity for all Wincanton stakeholders, notably its employees, clients and the Wincanton shareholders.”
The U.K.’s Takeover Panel had given CMA CGM four business days following the GXO offer to decide whether to further increase its offer.
For CMA CGM, the inability to win the deal is a hindrance for its wider operations as the French ocean carrier seeks to continue expanding its wider logistics services business. But the company said in its statement that both it and its subsidiary remain committed to growing their presence in the U.K., which “remains a core market” for CMA CGM.
In a recent report on transportation and logistics mergers and acquisitions, McKinsey & Co. highlighted that the market forces that are driving companies like CMA CGM and GXO to buy new businesses in 2024.
“Shipper demands for more services and greater visibility into those services are pushing logistics players to invest in broader, more diversified service portfolios, vertically integrated services, and intermodal solutions,” the report said. “Meeting these requirements translates into more complex supply chain designs, with greater speed, broader geographic coverage, and more cost-competitive offerings. Emerging expectations for sustainable operations will only complicate the picture.”
CMA CGM said in a statement that it will continue deploying its growth roadmap, leveraging its business strategy and “robust” balance sheet, all while highlighting that it will continue using “financial discipline in any acquisition.”
On Monday, CMA CGM revealed some good news that has been brewing for the container shipping firm, publicly unveiling its partnership with Nike to help the sportswear giant cut the carbon footprint of its maritime transport.
Nike entered into an agreement with the ocean carrier to purchase sustainable biofuel for a part of this transport, which will assist the athleticwear and footwear company in decarbonizing its supply chain.
From July 1, 2023, to May 31, 2024, Nike is using sustainable biofuel for the transportation of 36 percent of their volume with CMA CGM. Through this action, Nike will reduce their CO2 emissions by 25,000 tons. This initiative aligns with CMA CGM Group’s present strategy for decarbonization, in which the company preps to achieve net zero by 2050.
“Collaborating with a key player like Nike and taking this major step towards decarbonization is an important achievement,” Olivier Nivoix, executive vice president, CMA CGM Group Lines, said in a statement. “We are confident that our success will act as a catalyst, encouraging other carriers and customers to join us on this path to accelerate the transition towards a net zero industry.”
The container shipping titan, which has the third-largest market share worldwide by 20-foot equivalent units (TEUs) transported at 12.6 percent, has been on an acquisition spree in recent years as part of its growth strategy.
The company just completed its acquisition of fellow French logistics provider Bolloré Logistics for 4.85 billion euros ($5.3 billion) after getting approval from the European Commission, making it CMA CGM’s largest purchase yet.
In 2021, CMA CGM acquired e-commerce contract logistics and fulfillment business Ingram Micro Commerce & Lifecycle Services for $3 billion, the same year it launched its air cargo unit. A year later, the firm acquired two terminals at the Port of New York and New Jersey.
Although GXO’s board has recommended the deal to buy Wincanton, the deal is not done yet. Another company can still make a competing bid.
But the prospects look promising for GXO, which already has 316 facilities in the U.K. as of Dec. 31, 2022, scaled at an estimated 40 million total square feet. The contract logistics provider would gain another 170 sites across the U.K., as well as 8,500 trucks and trailers.
“The addition of Wincanton would modestly strengthen GXO’s business profile, adding a footprint in new verticals within the U.K. market,” said credit agency Fitch Ratings in a research note. “The similarity in operations and contract structures, which are largely on a cost-plus basis, are supportive of fairly low integration risks. The new platform is also supportive of GXO leveraging Wincanton’s reputation to further expand in these target markets.”
