French supply chain operator Geodis SA said Monday it will acquire U.S.-based OHL, extending a rapid consolidation in the logistics sector.
Geodis, a subsidiary of SNCF Logistics, the freight services division of French rail operator SNCF Group, said Monday it will buy the American company from private equity firm Welsh, Carson, Anderson & Stowe for an undisclosed sum. Sources familiar with the transaction said the final purchase price was about $800 million, or 10 times OHL’s earnings before interest, taxes, depreciation and amortization.
The acquisition brings Geodis a business with 120 distribution centers in the U.S. with more than 36 million square feet of warehouse space, along with 8,000 employees that provide outsourced logistics for companies mostly in the retail world.
The acquisition is the latest in a series of big transactions among the world’s largest logistics operators. FedEx Corp.bought GENCO, a specialist in logistics for returned merchandise, for $1.4 billion and is attempting a $4.8 billion purchase of TNT Express NV. United Parcel Service Inc. agreed to acquire freight brokerage Coyote Logistics for $1.2 billion. In June, Kuehne & Nagel International AG , the world’s No. 2 freight forwarder, acquired U.S. rail and truck logistics operator ReTrans and XPO Logistics Inc.bought Norbert Dentressangle in a $3.5 billion deal.
“We are in the midst of an M&A boom in the logistics sector,” said Benjamin Gordon, a managing partner in BG Strategic Advisors LLC, which focuses on acquisition strategy in the supply chain sector.
Mr. Gordon said consolidation is accelerating because demand for freight forwarding and other logistics services is growing faster than the overall economy. So-called asset-light companies, which don’t own their own fleets of trucks or ships, are most attractive to investors, he said.
The logistics sector is also split among many small players, with the 50 largest firms controlling just 50% of the market, he said.
“That’s the definition of a fragmented market,” Mr. Gordon said.
Geodis ranks 13th world-wide among logistics operators with $5.96 billion in revenue in 2014, according to Armstrong & Associates, a logistics industry research group. Armstrong estimated privately-held OHL, formerly known as Ozburn-Hessey Logistics, had $1.31 billion in revenue in 2014, ranking 27th on the list of U.S.-based third-party logistics operators.
Based in Brentwood, Tenn., OHL focuses on direct-to-consumer distribution services for specialty retailers, including electronics, apparel, health care and food and beverage companies.