TDG and Christian Salvesen in merger talks

The next step in the consolidation of the UK and European logistics market looks set to be underway with news that TDG and Christian Salvesen are in talks concerning a possible merger. Both companies stress that negotiations are at a very early stage. The merger of Salvesen and TDG would create a business with combined revenues of almost €2billion. This follows the takeover of Tibbett & Britten by Exel earlier in the year to create Europe’s largest contract logistics player and the acquisition of P&O Trans European by Wincanton two years ago.

Speculation has been rife for some time about the future of Christian Salvesen (see earlier Logistics Briefings), especially given the vacant position of Chief Executive following the removal of Edward Roderick. The fact that nobody has been appointed in his place makes any sale or merger of the company easier as there will be no disagreements over who will run the enlarged group.

Both Christian Salvesen and TDG have suffered a number of reverses over the past few years, many revolving around their attempts to expand into the mainland European market. Salvesen was forced to sell its loss making German subsidiary and TDG withdrew from the French market.

Although the merger would see Salvesen/TDG become the fourth largest contract logistics player in Europe, most of its business would be derived in the UK. One advantage of this will be the facilitation of the integration process, with no language or cultural barriers. However it will also increase its exposure to the UK market which is amongst the most mature in Europe. At a time when supply chains are becoming more regional, it also limits its ability to serve European supply chains.

Although negotiations are underway, there is still a possibility that other European operators could step in. For companies such as DPWN and Schenker, the opportunities to expand by acquisition in the UK, Europe’s largest contract logistics market, are running out. Similarly, any deal with a mainland European player would seem to offer better opportunities for either TDG or Christian Salvesen. In many ways Salvesen’s network solutions more closely resemble either Schenker’s or DHL EuroCargo’s than TDG’s business model. However it is thought that the Salvesen family, which owns around 30% of the company, would only be willing to sanction a merger and not an outright acquisition.