Werner Enterprises (NASDAQ: WERN) is selling its international freight forwarding segment, Werner Global Logistics, to a larger forwarding company, Scan Global Logistics Group.
Terms of the sale were not disclosed by Werner. However, Werner did say that the group generated $53 million in revenues in fiscal 2020. While full-year 2020 numbers aren’t available for the larger logistics segment at Werner of which Global Logistics was a part, the Werner logistics group had approximately $339 million in revenues through nine months.
SGL is a Danish company that has existed since 1975, according to Werner’s prepared statement on the sale. Its U.S. operations are based in Seattle and it has offices in 30 countries on six continents.
The sale of the unit comes with an arrangement between Werner and SGL under which the Danish company will offer its services to Werner customers, and SGL will look to Werner to provide it with truckload services in North America.
“WGL customers will benefit from SGL’s expansive network of over 115 locations across the globe, their modern transportation management technology, global multi-channel service offerings and SGL’s ability to provide local and international solutions in new trade lanes across the Asian Pacific, European, Middle-Eastern and Latin American markets,” Werner said in its statement announcing the sale.
John Steele, Werner’s CFO and executive vice president, said the relatively small size of the unit — just about 2% of Werner’s total revenue — and its relatively small reach compared to that of SGL meant that Global Logistics was better off with a bigger partner. “It probably makes more sense for SGL to purchase our operations and we are going to focus on what we do best in North America, as opposed to ocean and air,” Steele said in a phone interview with FreightWaves.
Steele said the staff of Werner Global Logistics will be given an opportunity to join SGL. The number of employees at Werner Global Logistics was not immediately available.
The deal is small enough that Werner said the divestiture would result only in a gain of 1 cent per diluted share. In the third quarter, Werner had diluted per-share earnings of 67 cents.
In Werner’s prepared statement, CEO Derek Leather was quoted as saying the company “remain(s) committed to our North American logistics capabilities in truck brokerage, freight management, intermodal and final mile services.”
Scan is part of the group of companies owned by SGLT Holding. Its global reach is extensive; for example, in its 2019 annual report released last year, it touted opening new offices in Peru and Myanmar.
In 2019, it reported revenue of 4.14 billion Danish kroner, which at current exchange rates translates to approximately $675 million U.S.