GXO Outpaces Ceva with $965M Wincanton Bid
GXO has made a cash offer to acquire U.K.-based logistics services provider Wincanton for approximately 762 million pounds ($965 million), turning up the heat on the company’s original bidder Ceva Logistics.
The $965 million offer, which amounts to 6.05 pounds per share, represents a 26 percent premium over the prior $767 million deal brought to the table by the France-based third-party logistics (3PL) provider on Monday.
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Wincanton, whose board had recommended Ceva’s “increased and final” offer on Monday, declined to comment on the GXO offer. The company had said it would “carefully consider” any proposal from GXO when it first confirmed the U.S.-based contract logistics provider had interest. GXO said it expects that the Wincanton board will recommend the acquisition.
Ceva is considering its options after the GXO bid. As of Thursday, the CMA CGM subsidiary has a maximum of four business days to increase its bid.
“Wincanton was always going to be acquired at some stage,” said Brian Templar, chairman of U.K.-based logistics consultancy Davies & Robson. “It’s only the pension liability that has stopped it happening before. The natural acquirers are the shipping lines that are cash-rich after Covid and the container shortage that led to huge windfall profits. I am surprised Maersk has not put in a bid.”
GXO CEO Malcolm Wilson expressed excitement over the combination of the businesses, highlighting his own company’s technological capabilities and global reach, alongside Wincanton’s expertise in the U.K. and Ireland markets where it operates.
“GXO has a long heritage in the U.K. and a demonstrated track record of seamlessly integrating businesses in this market,” said Wilson in a statement. “We’re proud that our operations support the growth of U.K. companies, create high value jobs and enhance the communities where we operate. As a focused pure play logistics leader, we are committed to investing in superior, differentiated logistics solutions, and we are confident that this combination will generate significant value for our shareholders, customers and employees alike.”
An acquisition would give GXO access to some significant apparel and home retail clients, including Ikea and Primark, alongside supermarkets Asda and Waitrose.
According to Templar, acquiring Wincanton would likely mean more to Ceva than GXO. Ceva is a smaller player in the U.K. generating roughly $950 million in annual revenues in the market compared to $3.7 billion for GXO.
Templar was critical of the potential combination, pointing out that the services both companies offer are broadly similar, so “neither gets much of a strategic benefit other than scale and more market domination.”
“GXO might also run into problems with the Competition & Markets Authority,” Templar told Sourcing Journal. “The acquisition by GXO is definitely not in the interests of customers and consumers. They are simply using scale to reduce choice and push up prices rather than extend the range of services to customers. Also, the desire by these major players to be ‘asset light’ means that small-to-medium sized players land up as subcontractors to the major players with constant pressure on margins.”
Wincanton operates in 170 sites, providing business services including storage, handling and distribution; high volume e-commerce fulfillment; setting up retail “dark stores”; two-person home delivery; fleet and transport management; and supply chain network optimization.
GXO said a deal would expand its offering and customer base in strategic growth verticals in the U.K., including aerospace, utilities, industrial and healthcare, with the company saying it could help it springboard into offering industrial services across European partners.
If a deal takes place, Wincanton customers could also potentially scale their supply chain logistics operations globally, GXO says, since the outsourced warehousing provider operates in 27 countries.
As of Thursday, Wincanton’s stock jumped more than 22 percent following the announcement.
According to the offer sheet, it is anticipated that headcount reductions would total less than 0.2 percent of the combined 150,000 employees, which would amount to approximately 300 workers.
GXO has been on a spending spree in the past two years, fortifying its U.K. presence with the $1.3 billion acquisition of Clipper Logistics in late 2022. The deal has thus far paid off, bringing its total physical presence to 316 facilities in the market, estimated at 40 million total square feet as of Dec. 31, 2022.
With the Clipper deal, the U.K. became GXO’s largest market by revenue in 2023, with the $3.7 billion generated comprising 37 percent of the firm’s total sales. Wincanton would bring another significant source of cash to the table, with the logistics company reeling in 1.4 billion pounds ($1.8 billion) in its last 12 months.
The company hinted that it was gearing up for another acquisition in its fourth-quarter earnings call earlier this month, when GXO chief financial officer Baris Oran said the contract logistics provider has a “very sizable” M&A target pipeline in all geographies and verticals, with the company “actively working” in a number of possible projects.
And in September 2023, GXO shelled out $181 million for e-commerce order fulfillment platform PFSweb, positioning the company to expand its operations within short cycle, high-volume product categories like luxury goods and cosmetics.
