Jacobson Deal Expands Norbert Dentressangle's 3PL Network Into U.S.

G00269540

Analyst(s): | |

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Summary

Jacobson Companies will enable Norbert to make its first foray into non-Europe-based third-party logistics. U.S. and European logistics managers will benefit from the expansion of Norbert's global network.

News Analysis

Event

On 31 July 2014, Norbert Dentressangle, an international logistics, transport and air and sea company, announced that it had agreed to acquire the U.S.-based, third-party logistics (3PL) provider Jacobson Companies from the private equity firm Oak Hill Capital Partners for $750 million.

Analysis

Any of Norbert Dentressangle’s European customer base and its new U.S. customers that operate in both regions could benefit from the opportunity to standardize 3PL suppliers on both sides of the Atlantic, with the potential for economies of scale in services and costs.

Norbert's 2010 acquisition of Schneider Logistics USA's freight forwarding business established its U.S. air and sea freight-forwarding business, which complements the Jacobson acquisition and the associated growth into non-European 3PL activity in warehousing and transport management. Norbert's prior experience in 3PL acquisitions should ease integration of the new business: it purchased Europe-based Christian Salvesen in 2007 and TDG in 2011, and quickly absorbed both into its operations.

Norbert has not yet said whether it plans to retain Jacobson's brand and run it as a stand-alone U.S. subsidiary; however, we believe it won't do so, as the customer benefit of an expanded global network will be driven by Norbert's ability to provide an integrated 3PL service through both regions.

In addition, Jacobson will give Norbert:

  • An established network of warehouses, transport assets and logistics resources in a growing market. If Norbert retains the Jacobson U.S. infrastructure, it will add more than 5,500 employees, 140 warehouses and more than 1,200 trailer units to its global portfolio.

  • A complementary customer base, assets and workforce experienced in providing logistics services to the chemical, automotive, and food and beverage industries.

  • Similar service standards, reinforcing Jacobson's traditional positioning of itself at the higher end of the U.S. 3PL market through its focus on high-quality service and client satisfaction.

  • Another 3PL business that has better-than-average profit margins, in a sector that is notorious for low-margin business.

To ensure a seamless transition without any service disruption, Norbert must work closely with the Jacobson management teams at every organizational level. The newly appointed U.S. leadership will need to reassure customers that it is business as usual and mitigate the risk of customers invoking early termination clauses. The French-based Norbert Executive Board must not underestimate the challenges associated with cultural differences. Also, if Norbert wants to compete globally with 3PL leaders such as DHL, K&N and Schenker, it will need to make further acquisitions to expand its international reach and network coverage.

Recommendations

U.S. and European logistics managers:

  • Wait for the integration process to be complete before considering whether to engage with the new organization. Expect some disruption as the company organizes and executes on its new management structure, asset ownership and technology alignment.

  • If you are currently a Jacobson customer, conduct a risk assessment of this acquisition. Review your contingency plans and contract wording in the event that you need to invoke an early termination clause. Seek written assurances from the new organization that your service will not be disrupted or that your commercial agreement will not be renegotiated early.

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