Wincanton Board Unanimously Recommends GXO’s $965M Bid
GXO now has the inside track to acquire Wincanton after the U.K.-based logistics services provider’s board unveiled its intention to unanimously recommend its $965 million takeover offer.
With the recommendation in place, Wincanton has withdrawn its support for a deal proposed by third-party logistics (3PL) provider Ceva Logistics, which now has until March 6 to up its bid for the second time.
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When Wincanton revealed that GXO was proposing a bid of its own on Monday, Ceva bumped its initial offer up from $719 million to $767 million, calling it an “increased and final” cash offer. At the time, Ceva said it would consider its options after GXO outbid it.
Sourcing Journal reached out to Ceva Logistics.
“We have long been clear that Wincanton is a great business with a compelling strategy, strong customer relationships and excellent people,” said Sir Martin Read, chairman of Wincanton, in a statement. “Under the current management team, we have made positive progress and ensured that Wincanton is at the forefront of logistics innovation. The board of Wincanton is pleased that GXO recognizes the very significant value inherent in this business and intends to recommend the offer to shareholders for their consideration.”
Wincanton’s stock is up nearly 40 percent since last Friday in the wake of the bidding war.
For GXO, Wincanton represents an opportunity to take up greater market share in the U.K., which is already the company’s largest market despite being based in the U.S. GXO generated $3.7 billion in total revenue in the U.K. in 2023, comprising 37 percent of the firm’s total sales.
The company made a splash in the U.K. upon acquiring Clipper Logistics in October 2022 for $1.3 billion, bringing in new fashion clients including Asos, River Island, PrettyLittleThing, Superdry and John Lewis, to add to its prior relationships with iconic global apparel companies like Nike, Zara and H&M.
With Wincanton on board, GXO would nail down more clients in its growing arsenal, including major apparel and home retailers including Primark and Ikea, and supermarkets Asda and Waitrose.
It appears GXO has ulterior motives beyond the fashion and retail space with a Wincanton deal. Although the contract logistics provider got 42 percent of its revenue in 2023 from omnichannel retail, GXO said in its offer sheet that Wincanton would help it expand its capabilities and customer base in strategic growth verticals in the U.K., including aerospace, utilities, industrial and healthcare. The ambitions go beyond the U.K., with the company saying a deal could help it springboard into offering industrial services across European partners.
Already with 316 facilities in the U.K. as of Dec. 31, 2022, at an estimated at 40 million total square feet, GXO would gain another 170 sites across the market, as well as 8,500 trucks and trailers.
Ceva Logistics, a subsidiary of container shipping giant CMA CGM, has some incentive to make another bid of its own. The 3PL has a smaller presence in the U.K. than GXO, bringing in approximately $950 million in annual sales in the market, according to CMA CGM. Ceva already generated $500 million in revenue via contract logistics, while its ground and rail services business drove an additional $290 million.
And Ceva’s U.K. branch operates 5.4 million square feet of warehouse space in the country, jusy over an eighth of the physical space that GXO currently has.
Whichever company wins out, they will be acquiring a business that has hit a bit of a lull in 2023 amid slowness in the U.K.’s transportation and logistics sector. Wincanton reported about $878 million in revenue in the six months ending Sept. 30, 2023, down 7.8 percent from the same period the year before, and pretax profit fell 26 percent to about $24.1 million.
But GXO appeared to have weather the storm. In the same two-quarter stretch, GXO saw revenues increase 11 percent to $1.85 billion. CMA CGM does not break out individual numbers for Ceva Logistics in the U.K.
