Kuehne + Nagel Group is to sell a major part of its UK contract logistics portfolio to XPO Logistics.

The transaction, which follows a major review of its contract logistics business, includes the drinks logistics, food services and retail and technology divisions.

These parts of the overall operation generated a turnover of approximately £617m in 2019 and employ 7,500 staff.

Detlef Trefzger, chief executive of Kuehne + Nagel International, said: "One year ago, we first announced the strategic review of our contract logistics business to improve profitability and focus on our core, scalable solutions.

“We have now reached a major milestone in this effort, having secured an agreement to sell significant non-core assets in the UK. With XPO Logistics, we are pleased to have found a good new home for our customers and employees."

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K + N said in a statement that it remains “highly committed” to the rest of its UK operations which include aerospace, government and pharma contract logistics businesses.

“These are amongst the Group’s scalable leverage areas,” the statement added.

The transaction, which is subject to merger clearance by the competent competition authorities, is expected to close in the second half of the year.

Kuehne + Nagel UK MD Brian Cox said: “This is an ambitious move that positions us perfectly to play to our strengths and deliver integrated supply chain solutions to our target markets.

"It is a deliberately timed decision reflecting a dynamic market place that builds on our stated intent to lead a transformation where we can be more agile and responsive to the changing needs of our customers and the complex nature of their supply chains. Underpinning this is our ongoing commitment to invest in our people and technology to build the best and most sustainable solutions for our customers.

"At the same time I’m delighted that the future is bright for all our people with respect to our recent announcements. I am really proud of how everyone within Kuehne + Nagel UK has responded to the news and I sincerely thank them for it.”

The global 3PL increased net turnover in the 2019 business year by 1.5% to 21.1bn CHF, with gross profit up 3.5% to 8bn CHF (£6.4bn).

Profits were up across its main divisions, with overland gross profit increasing by 3% to 1.1bn CHF (£884.2m) and turnover rising by 1.7% to 3.6bn CHF (£2.9bn).

Net turnover in its contract logistics division was up 2.8% to 5.4bn CHF (£4.3bn) and gross profit increased by 1.7% to 4bn CHF (£3.2bn).