Department stores and high-street retailers may be struggling with gnarly conditions, but European logistics service providers are catching the same waves that e-commerce players surfed so successfully.

Private equity (PE) firms are increasingly keen on the sector, which is also seeing strategic-led deals. Last year, there were 139 European logistics deals with total volumes of EUR 11.6bn, according to Mergermarket data. Volumes soared since 2022, when EUR 4.0bn crossed the line with a deal count of 149.

The sector has seen 77 deals in the year to date (YTD), up to Thursday 12 September, accounting for EUR 2.7bn, which is a big fall from YTD23 (EUR 9.2bn over 89 deals). Even so, one significant recent deal is PE giant Blackstone‘s [NYSE: BX] decision to buy an 80% stake in global real estate company Burstone‘s [JSE: BTN] pan-European logistics portfolio for a reported EUR 1.1bn.

PE firms are able to offer value-creation strategies by building one-stop-shop supply chains, developing niche market leaders such as last-mile solutions or offering specific end-markets offering, Nicolas Witt, Director and Head of Logistics at MCF, said. Buy-and-build strategies make sense for sponsors in fragmented markets with sizeable, family-owned businesses facing succession challenges, he said.

Corporate deals are also in focus, setting up 2024 as a potentially record-breaking year. DSV, a Danish transportation group, announced a deal to purchase Germany-based logistics company DB Schenker from rail operator Deutsche Bahn on Friday 13 September. The enterprise value in the deal was EUR 14.3bn, which will blow up the total data for the sector.

Narrow corridors

The awareness of the importance of the logistics sector significantly increased in the global pandemic given the disruptions in global supply chains, Witt said.

Russia’s invasion of Ukraine, which began in 2022, has also been a factor. The so-called Middle Corridor, which links Europe with China via countries like Kazakhstan, Georgia and sometimes Turkey, has gained increasing importance since sanctions were imposed on Russia, Witt said.

Leading European logistics providers are striving to offer comprehensive solutions, stretching from the Atlantic coast to the Bosporus and even beyond, Witt said. One example of deal to exploit the Middle Corridor involves DFDS, a Danish shipping company, which bought Ekol Logistics, a leading Turkish transport and logistics company, in a deal worth EUR 260m in April.

Deals coming

Clear skies and big waves are forecast for the near future. The deal pipeline includes Suret, a Poland-based provider of industrial logistics and relocation services, which could come to market soon, based on Mergermarket’s predictive Likely to Exit (LTE) algorithm. It has been held by Tar Heel Capital since 2019 and has an LTE score of 48 of 100*. 

Meanwhile, Compañía Auxiliar al Cargo Exprés (Cacesa), Iberia’s former air cargo logistics operator, is another one high on LTE’s list with a score of 46. Spanish PE firm, Talde Private Equity hired Lazard to prepare the sale, local press reported in January this year, but the process has gone quiet since.

Finally, French transportation services provider Groupe STG, which was acquired by PE firm Hivest Capital Partners in 2018, is another potential target with an LTE score of 45.

Don’t be surprised if European logistics continues to rip for dealmakers.

*Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing, or a deSPAC transaction.