GXO Logistics Inc.’s $1.3 billion buy of Clipper Logistics cleared a key regulatory hurdle this week, pushing through a deal that creates an e-commerce logistics behemoth.
News of GXO’s interest in the Leeds-based, high street retail logistics company first surfaced earlier this year when it made an offer of 920 pence ($10.46) a share for Clipper. The offer reflected about a 49 percent premium from the company’s closing price at the time. Clipper shareholders approved the sale in April, with the deal completed in May.
Approval from the U.K. Competition and Markets Authority was the final step in the acquisition process.
“GXO and Clipper are both industry leaders and together we’re even stronger,” GXO CEO Malcolm Wilson said in a statement confirming the regulator’s approval. “As one company, we expect to accelerate growth by expanding our geographic presence in key markets and verticals, bolstering our roster of blue chip customers and enhancing the breadth of innovative warehouse capabilities we provide.”
Clipper’s fashion clients include Asos, Giorgio Armani, River Island, PrettyLittleThing, Superdry, Liberty and John Lewis.
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That adds to GXO’s customer base, which includes Nike, Zara and H&M.
Clipper brings 10 million square feet of real estate across 50 locations and 10,000 employees, and expands GXO’s reach into Germany and Poland. It also adds Clipper’s expertise in reverse logistics, something Wilson hasn’t been shy in saying it excels at.
“Clipper is very advanced, more so—pains me to say it—but more so even than GXO, when it comes to reverse logistics, returns management,” Wilson told analysts in May. “It’s a real scale. It’s an art for them. We got a lot of very sophisticated software that drives it. So that is going to help us tremendously [to] leverage those skill sets and those technologies across the rest of GXO’s customer base, not just in U.K., continental Europe, but even bringing it out to North America.”
Clipper’s footprint merges with GXO’s 200 million square feet of warehousing, fulfillment and other real estate across 900 sites and about 120,000 employees.
GXO said it will start combining the two companies’ operations, while also “ensuring a successful holiday peak season for customers.”
The full benefits of rolling Clipper’s operations and customer base into the GXO fold are expected within two years, GXO said, with about $48 million expected in cost synergies from the deal.
GXO reported second-quarter revenue of $2.2 billion, an increase of 15 percent from the year-ago period. Adjusted net income totaled $79 million in the quarter, up from $51 million a year ago.
It hit a record in the quarter for new business, nabbing $475 million worth of deals, with recent customer additions that include Dolce & Gabbana, JD Sports, Lacoste, L’Oreal, RH and Spanx.
The growth is being driven not only by new accounts, but also expansion across selling channels for existing customers.
“On the one hand we’ve seen some return to brick-and-mortar by the consumer. On the other hand, large companies are still continuing to expand their online product offerings,” Wilson said in August when the company reported second-quarter results. “GXO is well positioned to capture outsized gains from both these trends. We see evidence of this in our omnichannel growth, which grew 4 percent faster than the GXO group as a whole.”
GXO said it expects full-year 2022 revenue to increase in the range of 12 percent to 16 percent, increased from prior guidance of 11 percent to 15 percent. The revised guidance factors in the impact of owning Clipper.
GXO, with a recent market cap of $4.4 billion, was spun off from trucking firm XPO Logistics last August.