French ocean shipping and logistics firm CMA CGM Group said Wednesday it will acquire most of the e-commerce and life cycle unit of technology distribution giant Ingram Micro for US$3 billion, a move designed to deepen CMA CGM’s footprint in the logistics business and build end-to-end supply chain solutions for its customers.
CMA CGM said the assets will be combined with those of Ceva Logistics, the contract logistics firm it acquired in 2019. CMA CGM said it paid for the Ingram Micro assets with internally generated funds.
When the deal closes during the first half of 2022, Ceva will become the world’s fourth-largest contract logistics provider, with 1,100 locations in 160 countries, CMA CGM said. Contract logistics providers manage complex warehouse and distribution operations for big companies that no longer choose to do it themselves.
The Ingram Micro unit specializes in e-commerce contract logistics and omnichannel fulfillment. CMA CGM will acquire the unit’s businesses in North America, Europe, Asia-Pacific and Latin America, as well as Shipwire, a cloud-based logistics platform. Ingram Micro will retain the rest of the unit’s operations, which include the North American and European reverse logistics businesses..
Michiel Alting von Geusau, who currently heads the unit for Ingram Micro, will continue in the same role within Ceva, CMA said.
The acquired assets are expected to generate $1.7 billion in revenues this year, a fraction of privately held Irvine, California-based Ingram Micro’s approximately $50 billion in revenue. The assets include 59 warehouses, mostly in the U.S. and Europe.
The unit was not considered a core business for Ingram Micro, one of the world’s largest distributors of technology products. In an email, Damon Wright, an Ingram Micro spokesman, said the assets will be a better fit under Ceva, which has been looking to broaden its e-commerce contract logistics capabilities under the CMA CGM umbrella.
The transaction is another step in efforts by steamship lines, notably Danish liner firm A.P. Moller Maersk (MAERB:.C.DX), the world’s largest steamship line, and CMA CGM to expand their portfolios in a bid to manage customers’ global supply chains. Maersk laid out its vision of an end-to-end strategy around the middle of last decade, a time when steamship lines, which were losing billions of dollars as a result of destructive price wars over vessel capacity, were keen to diversify from their core commodity business and build value-added solutions akin to what FedEx Corp. (NYSE:FDX) and UPS Inc. (NYSE:UPS) deliver in the air and ground parcel categories.
Liner executives are further betting that global businesses looking to increase their geographic and product resiliency in the wake of the COVID-19 pandemic will migrate to huge integrated providers with the resources to execute for them.
Over the past year or so, however, liner companies have minted billions of dollars as ocean freight demand has far exceeded supply, which had shrunk before the pandemic due to carrier consolidations. The sudden and unexpected windfalls have provided the carriers with ample means to pursue acquisition strategies.
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