The French logistics giant Geodis Group said today it has acquired US third-party logistics provider Ozburn-Hessey Logistics LLC (OHL) for a reported US$800 million, a deal that combines companies with nearly $9 billion in annual revenue, gives Geodis a strong presence in U.S. value-added distribution services, and opens up international markets to OHL.
Geodis, which operates in 16 U.S. markets under the name of Geodis Wilson USA, touted the move as a catalyst to expand its U.S. footprint in contract logistics and freight forwarding, which represents two of its five operating divisions, and to tap more strongly into the U.S. 3PL market. With about US$7.5 billion (6.8 billion Euro) in annual revenue, Geodis is one of Europe's top-five logistics companies. It is owned by SNCF, the French national railway system. As a result, OHL's rivals will now be in the unusual position of competing against a state-owned entity.
In business since 1951, OHL operates approximately 120 distribution centers in North America, controlling more than 36 million square feet of warehouse space. It provides a broad array of value-added services within its warehouse and DC network. The combined operation will have slightly less than 70 million square feet of global warehouse space that Geodis will no doubt move aggressively to sell across its platforms.
OHL is owned by New York-based private equity firm Welsh, Carson, Anderson, and Stowe, which has been shopping the company for some time. Geodis declined to disclose the purchase price in a statement today. However, published reports have put the cost at about $800 million, which, if accurate, would peg the value of Brenéwood, Tenn.-based OHL at about 10 times earnings before taxes, interest, depreciation, and amortization, or EBITDA, according to estimates from consultancy Armstrong and Associates Inc. Evan Armstrong, president of the firm, said the reported purchase price reflects reasonable value for a company like OHL. The transaction will be financed through a mix of cash and financing, Geodis said.
Based on gross revenue—revenue before factoring in the costs of purchased transportation—the combined company would become the world's 11th largest third-party logistics provider, according to Armstrong's 2014 database. If the reported purchase price is accurate, it would mark the ninth acquisition this year of $100 million or more involving one or more 3PLs. That matches the record set in 2007, Armstrong said.
For now, OHL will keep its name. Eventually, it will be rebranded as Geodis, along with the other companies Geodis has acquired.
Geodis covers more than 120 countries worldwide through its network partners and subsidiaries including Geodis Logistics, Geodis Wilson, and Geodis Supply Chain Optimization, the latter of which grew out of its December 2008 acquisition of IBM's internal global logistics operations. European operations account for about 80 percent of the groups' revenue, with France accounting for about 60 percent, according to Armstrong data.
During 2008, Ozburn-Hessey Logistics and all of its acquired companies rebranded as OHL. The branding project was undertaken to meld the multiple divisions, companies and brands that were parts of Ozburn-Hessey. Companies that had been acquired had specialized service offerings, management teams, and customer relationships and were well known within their geographies, according to Armstrong. However, none of the companies had an established international brand, he said.
In October 2012, OHL sold off its Turbo Logistics freight brokerage to Greenwich, Ct.-based XPO Logistics Inc.
According to the most recent Armstrong data, Geodis moved about 420,000 ocean twenty-foot equivalent units (TEU) annually, and 210,000 metric tons of air freight. By contrast, OHL moved 23,000 TEUs and 28,400 metric tons of airfreight.