Kintetsu World Express has bought APL Logistics from its parent company Neptune Orient Lines (NOL) for $1.2 billion. The Japanese freight forwarder said the decision was based on its management priority to compete on a par with European and US competitors in the global market; as much as 70% of APL Logistics’ business is in the US and Europe. The buyout brings to an end months of speculation that NOL was selling the division, following reports first circulated in August last year.
In a statement Kintetsu said that it signed a definitive agreement to purchase all of the shares of APL Logistics on 17 February. The completion of the deal is subject to approval by the relevant competition authorities and is expected to be complete by June this year.
“We are very pleased to successfully enter into this transaction,” said Satoshi Ishizaki, group president and CEO of Kintetsu. “Since 2013, we have laid out a strategy to strengthen our international presence especially in the US and Asia. This transaction fits right into our strategy.”
A third of APL Logistics business is dedicated to the automotive industry and it counts some of the world’s biggest carmakers and tier ones amongst its customers, including Ford, GM, Renault-Nissan, Toyota, American Axle and Lear. The company provides services from managing the inbound flow of parts and materials into assembly plants, to the distribution of finished vehicles. It also provides services for aftermarket parts movements.
A spokesperson for NOL told Automotive Logistics that the buyout would provide APL Logistics with the opportunity to expand its business with the strong backing KWE could provide.
“As articulated in our recent full-year results, APL Logistics has completed its organisational transition in support of the company’s growth strategy focusing on four verticals, which includes the automotive industry,” said the NOL spokesperson. “APL Logistics continues to deliver reliable services and make strategic investments for each vertical to further strengthen sales, operational and information technology capabilities.”
Ishizaki said that when the transaction is completed, KWE would continue to invest in and expand APL Logistics services to better serve customers.
NOL said the move would free it up to develop its liner business and bring in revenue to improve its finances.
“This is a strategic move that will allow us to focus on improving our liner shipping business, while at the same time enabling APL Logistics to grow,” said Ng Yat Chung, Group president and CEO of NOL. “The transaction will also strengthen our balance sheet and unlock value for our shareholders.”