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UK authorities clear GXO’s $1.3B acquisition of Clipper Logistics

Deal was agreed to in the spring pending final regulatory approval

GXO makes bid for UK logistics firm Wincanton (Photo: GXO Logistics)

GXO Logistics said on Tuesday that it has received regulatory approval to complete its acquisition of Clipper Logistics for a reported $1.3 billion.

The cash and share deal was formally agreed to on May 24, but each company has been run independently since then pending final approval from the U.K. Competition and Markets Authority (CMA). That approval came Tuesday.

“GXO and Clipper are both industry leaders and together, we’re even stronger. 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,” GXO CEO Malcolm Wilson said in a statement.

The addition of Clipper to the GXO Logistics footprint adds more than 50 sites, 10 million square feet of warehouse space and 10,000 employees to the business. GXO now has over 950 facilities globally, more than 210 million square feet and 130,000 employees.

Clipper also gives GXO (NYSE: GXO) a footprint in Germany and Poland and in the life sciences sector. Clipper also has expertise in reverse logistics and repairs.

“We share a commitment to ESG, providing an exceptional customer experience and harnessing technology to improve efficiency, productivity and employee safety. Being a great fit culturally will underpin our future success and make for a seamless integration,” Wilson added.

GXO said it expects to realize “significant productivity opportunities and cost synergies within two years from transaction close.” The integration process will begin immediately, the company added.

Not done yet?

In an August interview with Modern Shipper, Neil Shelton, chief strategy officer for GXO, said the Clipper acquisition may not be the last for the pure-play logistics provider.

“We’re really excited about using M&A to grow our business in the U.S., but it needs to be a great quality company like Clipper,” he said.

In August, GXO formally marked its first year in business by ringing the opening bell at the New York Stock Exchange. It also reported banner earnings that exceeded analysts’ expectations. It posted adjusted diluted earnings per share of 68 cents, up from 44 cents per share in the year-earlier quarter and 5 cents per share above consensus estimates. 

Adjusted earnings before interest, taxes, depreciation and amortization came in at $176 million, up from $150 million. Revenue rose 15% to $2.16 billion. GXO said it won $475 million in new business in the quarter, a quarterly record, and 40% of its new business wins came from reverse logistics — a still underdeveloped sector within the e-commerce supply chain.

For the full year, the company raised its guidance for organic revenue growth to 12% to 16%, from 11% to 15%. Adjusted EBITDA guidance was raised to a range of $715 million to $750 million from $707 million to $742 million. Adjusted diluted earnings per share is expected to come in at $2.70 to $2.90 per share, which is unchanged from prior estimates.

The addition of Clipper helps GXO grow its European logistics market. Combined with North America, GXO has previously said the two regions represent a $430 billion total addressable opportunity, of which only 30% is currently outsourced.

Two-thirds of Clipper’s revenue is tied to e-commerce and returns, 85% of which comes from the U.K. The company reported revenue of $946 million in its recent fiscal year ended April 30. But it will easily eclipse that mark in its current fiscal year as revenue for the first half was up 33% year over year. 

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected].