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UK based logistics company Wincanton has become the latest company to make a significant European acquisition, buying the principal French operations of Premium Logistics (formerly Giraud Logistics) for approximately e24m.

Premium Logistics will be merged with Wincanton’s existing Strasbourg-based activities (which it added through its previous acquisition P&O Trans European) to give it national coverage. In total it will generate revenues of around e150m in the market. Last year Wincanton extended its operations in Germany by acquiring high tech logistics specialist Midi-data for e7m.

Meanwhile German logistics provider Fiege revealed that it is looking to make more acquisitions. Fiege is one of the largest contract logistics companies in Europe, and is particularly strong in Germany. According to an interview in a German newspaper, it is looking to increase its presence in France, the Nordic region and Central & Eastern Europe.

Target list
Heinz Fiege, managing director of the company, stated that the company is looking to spend about e300m on new acquisitions and to this end it has already drawn up a target list of companies.

On a different matter Fiege commented that he believed that his company would benefit from the acquisition of Exel by Deutsche Post World Net. He thinks that the considerable integration process involved would result in a loss of management focus at DPWN which could mean his company picking up new customers.

Although generally well received, Deutsche Post’s bid to acquire Exel has raised some questions from those directly affected by the deal. Of main concern to Exel and DPWN will be customer reservations over the deal. Management of both companies have admitted that a number of clients have queried the benefits of further consolidation in the industry. The last few years have seen a number of major companies merged or acquired resulting in the emergence of a few ‘mega-logistics’ players, reducing choice and competition in the market. Fears are growing amongst many of the world’s largest logistics users over the re-balancing of power, especially as speculation grows over the long-term future of a number of independent mediumsized logistics companies.

However in the case of DPWN’s acquisition of Exel, the importance of the issue should not be over stated. DHL Solutions is not a major player in either the UK or US retail/consumer logistics sectors and therefore the deal will have little effect on Exel’s ability to increase its leverage over some of the biggest manufacturers and retailers. It seems that client concern may be more directed towards the potential upheaval involved in a major takeover. The fact that John Allen will stay with the company will significantly help the process of transitioning clients to the new organisation.

The level of job losses has also become a concern. Although the operations of the two companies will largely be complementary in the contract logistics division, there will undoubtedly be duplication in head office functions and also in the freight forwarding operations. DPWN has already stated that it is looking for synergy benefits of e220m a year from 2008 onwards and this will unavoidably involve head count reduction.

Taxing issues
Rival express and logistics company TNT has challenges of its own. The company has revealed that it is facing further problems related to its tax affairs which could severely affect its profits. Following an earlier investigation at its UK operation it is presently in the process of preparing an addendum to its report, submitted in August 2004 to the UK tax authorities, that will cover other UK tax matters not addressed in the original report. It is separately investigating the tax position of certain non-UK subsidiaries.

The outcome of these investigations may have a material impact on TNT’s results and financial position. The investigations have revealed the likelihood of illegal acts relating to certain past tax matters. The company’s Audit Committee has taken responsibility for overseeing these investigations and will retain an independent law firm to assist it in conducting an independent inquiry.

Some analysts have estimated the liability to TNT at between e200 million and e400 million.

Separately, TNT also announced that the company and its Chief Financial Officer (CFO), Mr Jan Haars, have agreed upon his resignation as statutory director and CFO. He will receive a severance payment e1,000,000. Mr Haars plans to leave no later than the end of the first quarter of 2006 or earlier, subject to the timing of the recruitment of his successor. According to reports, the resignation came about due to differences in management style and the company stresses it had nothing to do with the tax issues which have since been revealed.


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