France’s CMA CGM has finalized a historic acquisition, purchasing Bollore Logistics for $5 billion, marking its largest takeover to date. The company assures it is financially equipped for additional ventures to mitigate fluctuations in container shipping.
The deal, initially announced last year, concluded on Thursday, settling at a total of 4.85 billion euros ($5.25 billion) post debt and cash adjustments. This move expands CMA CGM’s CEVA Logistics unit’s scope, particularly in managing freight for pharmaceutical, cosmetic, and luxury industries.
Chairman and CEO Rodolphe Saade emphasized the strategic shift towards diversifying into logistics due to its lower capital requirements and lesser susceptibility to market cycles compared to shipping.
The acquisition complements CMA CGM’s portfolio, especially given Bollore Logistics’ clientele like LVMH and L’Oreal, with minimal overlap with CEVA division. Regulatory approval necessitated divestment in certain French overseas territories.
Anticipating significant growth, CMA CGM estimates that logistics will represent about 45% of group sales by 2024. While logistics contributed only 15% to core profits last year, its profit margin nearly matched shipping operations in the last quarter amid sliding shipping earnings.
In response to a post-COVID shipping surge, CMA CGM expanded its investments in port terminals, logistics, and French media activities. Saade indicated the focus for the year will be on integrating Bollore Logistics, which boasted 7.1 billion euros in sales in 2022 and a workforce of 15,000.
Despite the current acquisition, CMA CGM remains financially robust and is actively pursuing opportunities. Recently, it submitted an improved offer for British-based Wincanton, although faced competition from U.S.-based GXO Logistics, which announced a higher bid on Thursday.