Monday, May 4, 2015

US Outfit Buys Norbert Dentressangle in Deal Which Changes Freight Forwarding and Logistics Identity

New Rebrand Seen as a Mistake by Many in Europe
Shipping News Feature

US – FRANCE – Freight brokerage firm XPO Logistics, is set to acquire a majority stake in French headquartered road haulage, forwarding and logistics group Norbert Dentressangle, in a deal worth approximately €3.24 billion ($3.53 billion), subject to clearances from the US and European antitrust regulators. Expected to close in the second quarter of 2015, XPO intends to use the acquired transport and logistics operations as a platform to grow its business in Europe, in an attempt to become a top ten worldwide logistics company and leading European outsourced e-fulfilment provider. Many in Europe will see a forthcoming change to the company’s iconic name as a mistake however.

Norbert Dentressangle has 662 locations and approximately 42,350 employees, and serves a blue chip customer base that includes some of the world's largest companies. Following the closing, XPO will rebrand the acquired operations under the single global name XPO Logistics. Dentressangle, known by various nicknames (Nobby D etc.) is an instantly recognisable brand in the mould of such as Eddie Stobart etc. The purchasing company expects to have combined scale of approximately 52,350 employees at 863 locations in 27 countries.

Connecticut based XPO says that it will not reduce the total number of Norbert Dentressangle’s full-time employees in France for a period of at least 18 months from the closing of the deal. Additionally, XPO intends to maintain the European headquarters of Norbert Dentressangle in Lyon, France and also intends to maintain the headquarters and centre of decision of the European logistics business in France, as well as the transportation business in Drôme.

The market value of the transaction for Norbert Dentressangle shareholders is €2.17 billion, based on 9.9 million fully-diluted outstanding shares. The total transaction value is approximately €3.24 billion, including €1.08 billion of net debt. The Board of Directors of XPO and the Supervisory Board of Norbert Dentressangle have unanimously approved the transaction.

XPO has entered into a binding agreement to purchase all of their shares in Norbert Dentressangle, representing 67% of the company's outstanding shares. The agreed price per share is €217.50, excluding €1.80 dividend per share to be paid prior to the close of the transaction. The per-share cash price represents a premium of approximately 34% compared to the closing price of Norbert Dentressangle ordinary shares on April 27, 2015.

If XPO receives the relevant clearances, the company will then launch an all-cash simplified tender offer to acquire the remaining outstanding shares. If the tender results in XPO holding more than 95% of Norbert Dentressangle's ordinary shares and voting rights, XPO intends to squeeze out minority shareholders and delist the shares. The proposed transactions are structured in accordance with the General Regulation of the French securities regulator, the Autorité des marchés financiers (AMF), and all applicable securities laws and regulations in the United States.

Hervé Montjotin, Chairman of the Executive Board and Chief Executive Officer of Norbert Dentressangle, will serve as Chief Executive Officer of XPO's European business and President of the parent company. Substantially all of the management team of Norbert Dentressangle is expected to join XPO upon completion of the transaction. Montjotin, said:

"By joining XPO, we will become part of an organisation that shares the ambition that has guided us since the creation of Norbert Dentressangle 36 years ago: to become a global partner able to effectively support our customers in the management of their supply chains. As XPO's platform for growth in Europe, we can continue to pursue this goal on an even larger scale, to the benefit of our customers and employees. I am proud to lead this growth for XPO, together with the current management board."

The purchase will give XPO access to a European fleet network through a mix of 7,700 owned trucks, 3,200 trucks contracted through owner-operators and access to an additional 12,000 independent carriers. XPO will gain lane density covering approximately 90% of the Eurozone's GDP-producing regions. Norbert's transportation business includes €250 million of revenue from dedicated carriage.

The transaction could create a top ten worldwide contract logistics company based on combined revenue and the available 129 million square feet of facility space. Most of the facilities are leased and dedicated to high-value-added warehousing operations, including cold chain and reverse logistics. Norbert Dentressangle's €2.6 billion contract logistics business has deep customer relationships as evidenced by a 97% customer renewal rate. Approximately 26% of contract logistics revenues are generated in the United States.

This deal could increase XPO's global freight forwarding revenue to approximately $425 million annually and provide greater access to Euro-Asia trade lanes. Crucially XPO expects the added volume to improve its air and sea transportation buy rates for its customers. Bradley Jacobs, Chairman and Chief Executive Officer of XPO Logistics, said:

"This is a defining moment in the growth of XPO. Our planned acquisition of Norbert Dentressangle will catapult XPO to a top ten global logistics company. It will more than triple our EBITDA to $545 million and increase our revenue to about $8.5 billion upon completion of the tender offer, nearly achieving our 2017 financial targets two years ahead of plan. The acquisition of Norbert Dentressangle is a major leap forward, but we're still in the early innings of our long-term growth plan.

"In Norbert Dentressangle, we are acquiring a company that has been meticulously built over the last four decades. I am extremely pleased that Norbert Dentressangle's executive leader, Hervé Montjotin, will serve as chief executive officer of our European business and president of the parent company. I look forward to working closely with Hervé as we execute XPO's global strategy."