France's CMA CGM has completed a $5 billion takeover of Bollore Logistics, its biggest-ever acquisition, and said it had funds for more deals as it seeks to counter volatility in container shipping.
The acquisition of the logistics division of French conglomerate Bollore, announced last year, closed on Thursday at a final price of 4.85 billion euros ($5.25 billion) after debt and cash adjustments.
The deal will extend the reach of CMA CGM's CEVA Logistics unit into areas such as freight management for pharmaceutical, cosmetics and luxury firms.
CMA CGM, based in Marseille and privately controlled by the founding Saade family, is the world's third-largest container line.
"With Bollore Logistics, the logistics side will start to have a very significant weighting in CMA CGM as a whole," Chairman and CEO Rodolphe Saade told Reuters.
"I've pushed to diversify into logistics because firstly it requires less capex and secondly it's a sector less subject to cycles than shipping," he said.
Bollore Logistics' freight management activities, which serve firms such as LVMH and L'Oreal, had limited overlap with CMA CGM's CEVA division, Saade said.
The only concessions required by regulators cover certain French overseas territories, where CMA CGM will divest Bollore Logistics' activities.
CMA CGM says the deal will make it one of the five biggest logistics firms and it projected logistics would account for some 45% of group sales in 2024.
Logistics accounted for just 15% of group core profits last year but almost matched its shipping operations in profit margin in the last quarter as shipping earnings slid.
A post-COVID shipping boom fanned profits for shipping firms, prompting CMA CGM to invest in port terminals, logistics firms and French media activities.
Saade said CMA CGM would focus this year on integrating Bollore Logistics, which generated sales of 7.1 billion euros in 2022 and has some 15,000 staff, but remained in a favourable debt and cash position to seize further takeover opportunities.
CMA CGM this week submitted an improved offer worth 605 million pounds ($765.51 million) for British-based Wincanton, whose activities include grocery distribution services, though U.S.-based GXO Logistics on Thursday announced a higher bid.
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(Reuters - Reporting by Gus Trompiz; editing by Jason Neely)