GEFCO says more acquisitions to come following IJS Global deal

Expansionist logistics firm GEFCO will target more acquisitions, following yesterday’s move for forwarder IJS Global, as it strives to double its turnover.
The Russian Railways majority-owned company has ambitions to increase turnover from €4bn to €8bn by 2020.
As part of this growth, forwarding arm GEFCO Overseas has the target of increasing turnover to €1bn.
In airfreight terms the combined entity’s volumes will be 50% higher than the individual businesses.
Yesterday’s announced purchase of IJS Global will push GEFCO Overseas’ revenues half way to its goal.
A company spokesman told Air Cargo News that it would make further acquisitions following on from yesterday’s announcement: “As part of GEFCO external growth strategy, we consider acquisitions that will allow us to further enhance our logistics and transport services for global account while strengthening  our global network.
“We are especially interested in mid-size companies that operate in the freight forwarding business, with complementary customer portfolios.”

Meanwhile, IJS Global chief executive Sjoerd Van Loon told Air Cargo News that as many as five companies had been interested in buying the forwarder.
Initially, majority shareholder private equity firm Nimbus, which had a 74% stake, with the remainder owned by management and other investors, had not been interested in selling.
It believed the company’s improving business performance would push up its enterprise value over the coming years.
But in April, Nimbus relented and agreed to listen to offers after the interested parties indicated they were very serious about completing a deal.
A limited auction was organised in order to find out as quickly as possible if any of the offers were worth taking any further.
Van Loon said: “We had a limited auction and listened to four or five interested parties and GEFCO responded quicker than all the others.
“That more or less bought us into a position where we met with GEFCO and based on a letter of intent we said, ‘ok we’ll now give you the exclusivity for the next 15-20 days to sit down and work out the details’.”
GEFCO has declined to provide the financial details of the deal but Air Cargo News sister publication DVZ reports the deal was worth around €64m.
Van Loon said that IJS’ fit with GEFCO Overseas was one of the main considerations when selecting which bid to move forward with, although he added that the financial terms of the deal needed to meet expectations as well.
He said: “[The businesses] are very complementary. GEFCO is exactly where we are not: they are in southern Europe, South Africa, eastern Europe, Latin America. The networks are complementary and that attracted both parties.
“GEFCO is very strong in the automotive and we were working on building a time critical business mainly in the aerospace industry and pharmaceutical.
“And GEFCO was keen on the verticals we have developed over the years in Pharma, relief, in the oil and mining industry and fashion. So there really is a perfect match.”
One of the main concerns with all industry consolidation is the potential for job losses, but when asked about the potential for layoffs, Van Loon pointed to the lack of crossover between the two firms.
Where there was crossover, one still tended to be much larger than the other, meaning there would not be two big offices in these places that needed to be integrated.
“This means the deal doesn’t create situations where you have to integrate and there is two of everything. It’s hardly happening which is amazing and good for the people.”
He added that he expected to see the IJS brand remain in place for the foreseeable future, although there maybe cases where the name could be combined.
“Whether that will still be the case in two years’ time, I don’t know. I would expect in a few years there will be one name for the worldwide freight forwarding activities.”
Amsterdam-headquartered IJS Global specialises in air and sea forwarding and generated revenues of €160m in 2014.
It has an operational footprint in 16 countries, with hubs in the UK, Netherlands, Australia, China and Southeast Asia and the US.
GEFCO said the acquisition would broaden its customer portfolio and speed up its diversification.
The logistics firm’s current 2020 growth strategy aims to develop its geographic as well as sector diversification.
As well as expanding its air and seafreight operation and adding to its customer portfolio, GEFCO said the acquisition would allow it to develop its presence in the world’s two primary freight forwarding areas: Asia and the US.
It also allows it to expand its European network through greater presence in the UK, the Netherlands and Germany, while also obtaining a foothold in the Australian market.
The merged group will be able to operate in over 150 countries and connect over 350 destinations
Van Loon also provided his thoughts on why there are so many acquisitions taking place in the forwarding and logistics industries at present.
He said that there was money on the balance sheet of larger firms and that those businesses that weren’t flush with cash could finance deals at favourable terms at the moment.
The deal is the latest in a series of acquisitions to sweep the forwarding and logistics market this year.
It follows on From XPO’s recent deal to take over Con-Way and Norbert Dentressangle, Geodis’ move for OHL and Kuehne+Nagel’s purchase of ReTrans.
Commentators have suggested the moves are linked to the strength of the US dollar and weak market growth meaning logistics companies are having to acquire and expand into new territories in order to grow.

Share this story

Related Topics

Latest business news

SF Airlines launches Ezhou-Budapest air cargo route

SF Airlines has launched an air cargo route linking Ezhou Huahu Airport in central China’s Hubei Province with Budapest International…

Read More

Share this story

Korean picks Air Incheon as preferred Asiana cargo bidder

Air Incheon has been named as the preferred bidder for the sale of Asiana Airlines’ cargo business as part of…

Read More

Share this story

Worsening containership market keeps the pressure on air cargo

The recent deterioration in the ocean shipping market could be pushing more cargo to airfreight following the impact of the…

Read More

Share this story

Air Cargo News

Air Cargo News
Established in 1983, Air Cargo News is the leading source of news, information, interviews, analyses and reports to the global airfreight industry. Our leading portfolio includes print, digital and events that give businesses in the airfreight industry the ability to connect with decision-makers in this sector.