A pair of tech providers within the warehouse automation space, Louisville, Kentucky-based MHS Global and Atlanta-based Fortna, are combining to form a new multinational logistics provider, the companies announced this week.
MHS, one of the 10 largest materials-handling systems providers on the planet by worldwide revenue, will merge its automation technology with Fortna’s warehouse and distribution software solutions to form a joint provider of parcel, warehouse and distribution and life-cycle services. The combined venture will be valued at around $4 billion, a source familiar with the matter told The Wall Street Journal.
Thomas H. Lee Partners (THL), a private equity firm with holdings in both companies, will remain the majority owner of the as yet unnamed entity. A wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund, will acquire a minority stake in the business.
“Fortna has been a trusted adviser driving competitive advantage for our clients as they build direct-to-consumer models, increase service levels and enable a lower cost to serve,” said Fortna CEO Rob McKeel, who will also serve as CEO of the combined entity. “The combination with MHS will enable the model to scale with our clients globally and allow the combined company to drive further innovation in operating models, software and automation.”
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As supply chain disruptions continue unabated, MHS and Fortna are betting that operators’ desire for end-to-end solutions isn’t going away either. Because supply chains are so fragmented at the moment, a combined solution is often one of the easiest ways to scale up — and the two companies know it.
MHS specializes in automating processes for parcel, cross-docking, conveyance and sortation. Fortna, meanwhile, largely focuses on orchestration and optimization software. But whereas operators would typically need to enlist two different companies to automate their supply chain — one that provides the hardware, one that provides the software — they can now streamline both sides of the coin with a single relationship.
“Combining with Fortna will allow us to accelerate our collective efforts on all fronts, to the benefit of our customers, employees and suppliers,” said MHS CEO Scott McReynolds, who will serve as president of the new company.
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Jim Carlisle, managing director at THL, added, “Automation solves industrywide challenges, such as labor shortages, and helps customers meet escalating demand. These two companies are well positioned to meet these challenges and unlock new opportunities for their customers.”
Carlisle will become the board chairperson of the combined company. He also heads up THL’s technology and business solutions division and the THL Automation Fund, an investment vehicle within the company that raised $900 million in 2020 to back automation-focused tech solutions.
Terms of the transaction between MHS and Fortna were not disclosed. Neither was the size of the investment from the ADIA. Both MHS and Fortna will operate as separate entities until regulatory approvals are passed down, a company spokesperson said.
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