It’s been interesting to see the Wincanton acquisition unfold in recent weeks. Following GXO’s offer, CMA CGM have not increased theirs, leaving just one on the table.
The prospect of GXO buying Wincanton is a very different proposition compared to that of CMA CGM’s offer. With CMA CGM, Wincanton’s customers would have beeen offered integrated end-to-end supply chain solutions, whereas GXO, as a pure-play contract logistics provider, typically focuses on warehousing and transport operations.
Wincanton is a natural fit for GXO, with its localised knowledge and industrial and aerospace expertise offering a prime opportunity for the logistics giant to expand into new markets. A seasoned acquirer, bolstered by a management team experienced in this type of integration, GXO has been scaling up in recent years, acquiring Clipper Logistics, for example, back in 2022. With this in mind, it’s been pertinent to observe the financial market’s reaction to the potential acquisition, with no movement in share price.
The Wincanton acquisition process will likely follow a similar suit to that of Clipper Logistics, with GXO absorbing Wincanton’s operations and brand. But the deal makes sense for Wincanton and its customers, too, which would stand to benefit from the international expertise and scale of capabilities afforded by GXO’s existing network.
GXO is also a market leader when it comes to robotics, automation, and tech solutions, meaning Wincanton could level up its operations by leveraging GXO’s reputation. With that being said, some of Wincanton’s existing customers could be left in an unusual position. Sainsbury’s, for example, recently split its entire UK supply chain between three logistics providers – two of which were Wincanton and GXO. This means that the new business entity would manage a major proportion of the customer’s operations.
Looking at the bigger picture, the nature of this deal reflects a growing trend we’ve seen for market consolidation in the third-party logistics (3PL) space in recent years. There are now just a handful of major players in the tier-one 3PL space, and Wincanton is the only remaining UK-listed logistics company.
Ultimately, this offer looks likely to benefit both respective parties. But as we discussed in our recently published good practice guide, Mergers & acquisitions: Securing strategies for supply chain success, businesses should consider pre-M&A supply chain and logistics due diligence, alongside the legal and financials, carefully, before committing to a deal.
Chris Clowes, senior consultant at global supply chain and logistics consultancy, SCALA
