When it set foot in the United States in 2019 with the acquisition of Jagged Peak, ID Logistics was seen as the local Tom Thumb of contract logistics. With Kane Logistics, he will become a big one. The group founded and headed by Eric Hémar announced on Monday February 14 the signing of a protocol for the acquisition of Kane Logistics, a pure player family of contract logistics and warehousing and co-packing services born in 1930. On the stock market, the announcement is warmly welcomed: the stock jumped more than 7% on Tuesday afternoon, to 349 euros, and took the head of the SRD.
” When we returned to the United States three years ago, we made the analysis that, to reach a credible size in this large market, we had to go faster than our usual organic growth.says the CEO. Our M&A department has oriented its research to scan the market and identify targets with a turnover of 200 to 450 million dollars. » The very first contacts with Harkness Capital, the private equity owner of Kane Logistics, were unsuccessful. ” Kane was more likely to be sold in a scenario for 2023-2024explains Eric Hémar. We convinced Harkness Capital of our ability to take Kane to the next level, but we had to decide now. So they opened the door to negotiations. In the end, the operation was simple and quick. The two parties agreed on a price, there was no bidding. The transaction, which must still obtain the agreement of the American Antitrust, will be carried out on the basis of an enterprise value of 240 million dollars (approximately 210 million euros), i.e. once the turnover and around 20 times operating income. It will be fully funded in cash. via a five-year bank loan and should be finalized before the summer. The management of Kane Logistics will remain in place.
Critical size
Based in Pennsylvania, Kane Logistics has 20 sites, representing 725,000 m², mainly in the eastern part of the country, but also in California. ” Warehouses are located as close as possible to customers “, explains Eric Hémar. Both groups have similar patterns: asset light, solutions dedicated to customers and strong IT skills. However, there are nuances: when French is very present in e-commerce and retail trade, the American, with a 100% local presence, is aimed above all at manufacturers of consumer goods, food/beverage and distribution, such as Mars, PepsiCo or Materne. This paves the way for a cross selling (cross-selling) from European customers to the United States and vice versa. ” Thanks to Nespresso, main customer of ID Logistics US, Kane Logistics will strengthen its e-commerce offer “, adds Eric Hémar. Driven by two years of 20% growth, the family company posted 235 million dollars (207 million euros) in billings last year, with a current operating margin between 4.5% and 5%, higher 1 point to that of its receiver. Post-acquisition, the United States will represent around 400 million dollars, contributing 17% of ID Logistics’ revenues, which has thus reached the critical size so much desired in the country. ” This acquisition will be accretive to EBITDA [excédent brut d’exploitation] from the first year of consolidation “, adds the leader.
To maintain its growth rate, Kane Logistics will have to open between 4 and 5 sites per year. The US contract logistics market is highly fragmented, with the top twenty customers accounting for less than 50% of the market. And the level of logistics outsourcing by companies is low, around 30% to 35%, compared to 35% to 40% in France and 50% and more in the United Kingdom. Within a few years, ID’s ambition is to divide its sources of income into three equivalent thirds: France, Europe outside France, and international markets. On the balance sheet side, ID Logistics maintains a sound financial structure after the operation, with a pre-IFRS16 debt ratio estimated at 2.6 times pro forma EBITDA.