In the past year 2021, the world has witnessed impressive numbers with more than 62,000 Mergers and Acquisitions (M&A) deals globally. Despite pandemic-related impacts ranging from supply chain shortages to the onset of inflation or market volatility, M&A activities are forecast to continue to grow strongly in the coming years. 2022, especially in the field of logistics…
What is M&A?
M&A stands for Mergers and Acquisitions. M&A is an activity to gain control of an enterprise through a merger or acquisition between two or more businesses to own part or all of that business.
- Mergers: is a form of association between businesses of the same size to create a new legal entity. The merge enterprise will own all the assets, interests, rights and obligations of the merged enterprise.
- Acquisitions: where a large business buys smaller and weaker businesses, these acquired businesses will retain their old legal status and the acquiring business will have legal ownership for the business just bought.
M&A deals are for the purpose of participating in and deciding important issues of the merged or acquired business, rather than simply owning shares. M&A often brings a lot of benefits to businesses: expanding market share, achieving better business efficiency, reducing the number of employees needed, reducing unnecessary costs, taking advantage of transferred technology…
Forms of M&A
Based on the functions of member companies, the nature of mergers and acquisitions: M&A activities can be classified in 3 forms:
- Horizontal M&A is a form of merger and acquisition between businesses that provide the same or similar lines of products and services to the end consumer, that is, in the same industry and in the same area. production phase. The companies, in this case, are often direct competitors.
- Vertical M&A is done with the aim of combining two companies with the same production value chain, same service, but the only difference is the production stage in which they are operating.
- Combined M&A is a form of merger and acquisition to form corporations. Conglomerate mergers take place between companies that serve the same customers in a particular industry, but they do not offer the same products and services. Their products may be complementary, products that go together, but are not technically the same product.
Benefits of M&A
– Improve business scale: Mergers and acquisitions will help businesses penetrate new markets. They will have a new product line or expand distribution coverage, expand branches, transaction offices, projects… The increased business scale, promoted distribution of goods will also help businesses have larger market share.
– Reduce human resource costs: In fact, when two or more parties merge, there is a need to reduce jobs, especially indirect jobs. Therefore, M&A will be an opportunity for businesses to screen for less effective positions, businesses will have the opportunity to receive a well-skilled and experienced workforce.
– Improve financial resources: One of the most outstanding benefits of doing M&A work is that the financial strength of the business will be significantly improved. After the M&A, businesses will be able to increase their capital use and access to capital, share risks, and enhance financial transparency.
– Improve technology – technical level: Through M&A, enterprises can take advantage of each other’s technology or techniques to create competitive advantages. In addition, abundant capital is also one of the favorable conditions for them to be equipped with modern technologies for business.
Billion-dollar M&A deals in the logistics industry in the world in 2021
According to the Vietnam Logistics Report of the Ministry of Industry and Trade, in 2021, a number of mergers and acquisitions will be carried out by leading enterprises in the global logistics industry:
The field of forwarding
The first is the deal DSV Panalpina acquired Agility’s global integrated logistics business unit (Agility’s Global Integrated Logistics – Agility GIL). Agility GIL is the unit in charge of logistics business, under Agility Public Warehousing Company K.S.C.P. The deal is worth $ 4.1 billion, about $ 500 million lower than the deal DSV acquired Panalpina more than two years ago. Agility GIL is one of the largest air forwarding businesses in the world with 2020 revenue reaching 4.0 billion USD, of which about 80% is related to air and sea freight. After the successful takeover of Agility GIL, DSV Panalpina is expected to become the world’s largest forwarder, surpassing Kuehne + Nagel (K+N) and DHL Global Forwarding.
Previously, in May 2021, Kuehne + Nagel completed the acquisition of 88.5% shares of Apex International. Since the beginning of 2021, in an effort to expand its presence in Asia-Pacific, Kuehne + Nagel has signed an agreement to acquire Apex International Corporation.
The transaction value is estimated at about $1.5 billion – $2 billion. This is the largest acquisition in the history of Kuehne + Nagel which hopes to make the company the largest forwarder in the air freight market. Apex was founded in China in 2001 and has expanded rapidly throughout Asia, especially with trans-Pacific and intra-Asia services. The planned acquisition of Apex International in China will add an additional 9% to Kuehne + Nagel’s revenue and increase the share of revenue in Asia Pacific from 11% to 19% of total revenue. However, in July, Kuehne + Nagel agreed to sell a 24.9% stake in Apex International to the private equity firm Partners Group in order to implement the “Conversion Value Creation Plan”, strengthening its position in China market. Partners Group will also join major shareholder Kuehne + Nagel Group with a seat on the Apex Board of Directors.
In an effort to perfect the logistics ecosystem with an integrated end-to-end solution from international shipping by sea to domestic logistics with a warehouse system, customs brokerage, trucking technology, in August/ 2021, AP Moller-Maersk bought two e-commerce logistics companies with a value of 924 million USD, including: Visible Supply Chain Management LLC (USA) and B2C Europe company (Netherlands).
At the same time, Jas Worldwide is carrying out the acquisition of Greencarrier Freight Services (a subsidiary of Greencarrier Group, providing freight forwarding, logistics and supply chain management services) in an enhanced strategy. its position in the Nordic, Baltic and Eastern European regions, while consolidating existing operations in the UK and China.
The field of warehousing
Lineage Logistics, LLC – a leader in the cold chain industry has acquired Hanson Logistics – the 12th largest supplier of cold logistics solutions in North America – according to the International Association of Refrigerated Warehouses (IARW). Previously, Lineage purchased two more cold storage suppliers to strengthen its domestic operations: Marc Villeneuve (direct-to-store distribution service in Montreal) and Orefield Cold Storage (including three locations in Eastern Pennsylvania). As of today, Lineage’s North American network of facilities includes more than 250 facilities in 35 states and two Canadian provinces with more than 1.7 billion cubic feet of temperature-controlled storage.
The field of sea transport
After the agreement was completed in March 2021, in July 2021, Hapag Lloyd officially completed the acquisition of NileDutch’s container line and technology line to promote exploitation of the shipping market. West African. Hapag-Lloyd and NileDutch hope to integrate most of their businesses by the end of the year.
In September 2021, multimodal transport company focused on short European trains – Samskip expanded its operations in the Baltic following the acquisition of Lithuanian feeder carrier Sea Connect. Once the acquisition is complete, the company will be renamed Samskip Sea Connect and will develop new short sea routes connecting Russia, Lithuania, Denmark, Germany and the Netherlands in addition to continuing to operate intermediate routes. moved on. This action of Samskip aims to strengthen its position in Russia, the Netherlands and ports in the Baltic region.
The field of air transport
In addition to the completed M&A deals, despite the approval of the government-run Korea Development Bank, the merger of two major Korean airlines, Korean Air and Asiana Airlines. announced since 2020, there are still many procedures before officially completing this process. Completion is expected in 2024. Korean Air and Asiana Airlines account for a combined 40% of cargo and passenger space at Incheon International Airport.
M&A trends of logistics industry in 2022
Although the pandemic has caused many disruptions to the global economy, leading to many structural and financial barriers to transactions in 2022, including high interest rates, rising inflation, increased taxes and regulations are getting tighter. Despite these difficulties, the global M&A market is expected to grow strongly in 2022 as economic optimism remains high, with transaction volumes and values continuing to reflect a vibrant market with abundant capital…
In the field of logistics, when e-commerce develops, it leads to the form of online shopping. And the proliferation of new business models that allow delivery service companies with large retail delivery frequencies and wide service coverage across provinces and cities will also open up opportunities for M&A activities.
In addition, other trends in logistics in 2022 such as: focusing on investment in warehouses, logistics centers and cold supply chains are increased from e-commerce, along with the demand for renting space for storage, classification of goods, fulfillment of orders… promises to also be the driving force for M&A to increase sharply.