Germany’s Kion Makes Logistics Push With $2.1 Billion Dematic Buy
Forklift-trucks supplier plans to boost logistics business and global reach through deal
A Linde electric forklift truck on the vehicle production line a Kion factory in Aschaffenburg, Germany. Kion said it is buying Dematic Corp. for $2.1 billion to boost revenue and cut costs. PHOTO: BLOOMBERG NEWS
FRANKFURT—Germany’s Kion Group AG, a supplier of forklift trucks and warehouse equipment, is buying Dematic Corp. of the U.S. for roughly $2.1 billion in cash to grab a share of booming, e-commerce-driven demand for automated logistics centers.
The move by Kion could help give its largest shareholder, China’s state-owned Weichai Power, a foothold in the U.S. Dematic equipment and software have been used at production facilities of companies including Ford Motor Co. and Harley-Davidson Inc.Dematic is also involved in automating warehouses and distribution centers of Amazon.Com and Wal-Mart Stores Inc.
“Kion Group and Dematic together will design and deliver solutions that better position our customers to respond to dynamic demand,” said Ulf Henriksson, chief executive of Dematic.
Kion’s largest shareholder is Chinese diesel-engine maker Weichai Power, with a 38.3% stake. The remainder trades freely on the Frankfurt Stock Exchange and it is included in Germany’s MDAX midcap index.
Kion said that by buying Dematic it aimed to become a “one-stop supplier of intelligent supply-chain solutions.” It predicts that demand for supply-chain automation will grow 10% by 2019.
The company said it is the largest manufacturer of industrial forklift trucks in Europe, the global number-two behind Toyota Motor Corp. and the leading foreign supplier in China.
The deal comes amid growing competition between traditional bricks-and-mortar retailers and e-commerce specialists for online business. Peapod Inc., a food-retailing unit of pending merger partners Ahold and Delhaize Group, for example, recently built a 400,000 sq. ft. fulfillment center, running in part on Dematic software, to compete better with online grocery businesses such asAmazon.com and Fresh Direct in New York.
Chinese companies have been on a buying spree in 2016, making the country the world’s top foreign acquirer to date, according to data provider Dealogic. If it finishes in first place, it would be the first the U.S. hasn't held pole position since 2007.
Together, Kion and Dematic would have had revenue of €6.7 billion ($7.6 billion) last year, an adjusted operating profit margin of around 9.4% and a global workforce of 30,000, Kion said.
The merged company should be able to cut costs and boost revenue by combining the two firms’ geographical reach in key markets such as Europe, China, Brazil and the U.S., the Wiesbaden-based firm said.
The company will initially fund the transaction via a €3 billion bridge loan from a group of banks. Kion shares initially fell more than 5% in early trade.
