Close to half of logistics firms in the UK say that they are likely to make an acquisition over the next year, despite confidence among businesses in the sector dropping significantly over the past 12 months. With issues mounting in the sector, a new poll suggests that operators see M&A as a way to remain competitive and generate sustainable growth in a challenging marketplace.
Why are companies targeting acquisitions?
In the second half of 2022, Leeds-based global tech-enabled supply chain firm Ligentia Group completed the acquisition of Polish Logistics firm VGL Solid Group, with backing from Equistone Partners Europe. The deal, which brought Ligentia’s revenues past the £1 billion mark, accelerated the company’s aim of expanding into new, fast-growing regions and sectors.
Commenting on the deal Equistone’s investment director Sebastien Leusch and director Chris Candfield said: "We are proud to support the board in this acquisition which enables the business to expand into new geographies and sectors, continue to innovate its technology and strengthen its position in a dynamic market.”
"The team have delivered exceptional growth over the last two years, including the launch of its US business, and we have been hugely impressed by the clear ambition to scale and build a diverse, customer-focused and responsive global supply chain management business."
Virginia International Logistics is a Cavan-based logistics firm that serves the food and beverage, pharmaceutical, industrial and manufacturing sectors. Having traded for 40 years, the company has grown to now operate a fleet of over 130 trucks, 400 trailers, as well as a 50,000 sq ft facility.
However, the business is targeting further growth and, in September 2022, secured funding from private equity firm MML Ireland to finance its future plans. With MML’s backing, the company is seeking to take advantage of market opportunities in order to grow both acquisitively and organically.
Virginia International Logistics Managing Director Ray Cole commented: "Given international delivery trends, the logistics sector continues to expand in terms of expertise and capacity, which creates market opportunities for well positioned and invested businesses.”
"I look forward to working with MML Ireland on our expansion plans. We are all ambitious for the company and intend to grow both organically and by acquisition. With its experience of working with dynamic scaling businesses, MML Ireland is the perfect partner for the next stage of our journey."
Drac Logistics is a Stoke-based logistics business that also operates an office with four staff members in Falkirk. As it sought to increase its presence in Scotland, the company struck a deal to acquire Aberdeenshire firm Caledonian Logistics, a 145-strong logistics business with a fleet of 90 trucks and facilities in Kintore, Cumbernauld, Inverness and Oldmeldrum.
Following the acquisition, Drac’s Falkirk staff will transfer to Caledonian’s Cumbernauld site, while the buyer will also establish a Caledonian Logistics container haulage division, with a £600,000 investment in an additional 10 vehicles and 14 skeletal trailers.
Commenting on the deal, Drac owner and CEO Alex Hayes said: “Caledonian Logistics has a fantastic name for service and that attracted us in the first place. Secondly, we have a strong Scottish customer base and do a lot of food products out of Scotland for European and overseas markets.”
“There’s a shortage of container transport within Scotland, like there is all over the UK and Europe. We’ve put in £600,000 investment as well as other cash to grow the business.”
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