3i puts ABX onto a growth trajectory
In one of its most complex buyout deals to date, 3i has purchased ABX Logistics Worldwide from Belgian Railways (SNCB Holding) and will now work closely with the management team, to grow and develop the business.
A strong brand but a challenging deal
Formed between 1998 and 2001, ABX Logistics has 35 subsidiaries and operates in close to 100 countries around the world. The company, which has a workforce of approximately 8,000 people and a turnover in excess of €2bn, is responsible for managing international freight transport requirements for third party clients. 3i commenced discussions with ABX’s management team and SNCB in the Autumn of 2004. ABX CFO, Kris Geysels, approached 3i Partner Stuart McMinnies – whom he had met during a transaction some five years previously. Geysels was keen to work with 3i because of its sector knowledge and experience of handling complicated pan-European deals. McMinnies then teamed up with 3i Partners Robert Van Goethem, from the Benelux office, and Lorenzo Salieri, from the Milan office. Negotiations with SNCB, and its owner the Belgian government, led to a period of exclusivity being agreed in March 2005.
Stuart McMinnies explains: “SNCB and the government understood the complexities surrounding the ABX transaction. It was critical for them to find and work with a buyer who had the experience, geographic coverage and tenacity to understand and add value going forward to this business.”
Appetite to complete the deal
“We also convinced the management that we had the experience to successfully complete this deal, including elements of turnaround required, for example in Germany, and make it a success. Many private equity firms would have walked away from the opportunity because it was so complicated and involved negotiating not just with SNCB, but also the Belgian government and European Commission (EC) simultaneously,” adds Robert Van Goethem. At the time of the negotiations ABX was going through a period of intense change. It was rationalising certain loss making domestic road businesses and was also putting considerable strategic focus into integrating its different geographic operations. Despite these issues 3i was convinced that the business had a positive future. The market in which the business operates, exporting and importing to and from the Far East, is set to grow by 5-10% per annum and ABX believes it can outperform this by utilising its loyal and supportive customer base. ABX also operates in a highly fragmented industry, with no one player holding a dominant share of the market. Over the coming years this market is expected to consolidate, which should make ABX an attractive target in the future.
A triumphant result
Robert Van Goethem says: “Although we were aware of the challenges ahead, we believed that we could resolve the majority of them shortly after the investment. That has proven to be the case – the restructuring process in Germany is now completed and the German legacy property issues have been resolved. This deal clearly demonstrates 3i’s unique competence at carrying out complex multi-jurisdictional transactions in the mid-market.It is testimony to our strength and tenacity that we have overcome all the hurdles that have been set in our path and are now on course to realise ABX’s full potential.”
A successful sale
DSV entered into an agreement with 3i (“3i Group plc and 3i funds”), the ABX management team and other shareholders to acquire all of the shares of XB Luxembourg Holdings 1 S.A., the parent of the ABX Logistics Worldwide SA/NV Group ("ABX") of Belgium. The combination of two European leaders will create a strong global Transportation and Logistics player.
ABX and DSV will integrate their activities in Air &Sea, Road and Contract Logistics to create both operating and administrative synergies. The synergies are expected to be fully implemented before the end of 2011, when the margins of ABX are expected to be on a level with the margins realised by the various divisions of the DSV Group
Laurent Levaux, CEO of ABX, commented:
“We are excited to join forces with DSV and to enhance our presence in a number of regions around the world. There is a strong cultural fit between our companies and cultures. Beyond our geographical complementarities, both CEOs share the same values of customer focus, entrepreneurship, and managers’ empowerment. Together, ABX and DSV will accelerate their expansion.