Company

The client is a global leader in warehousing and value-added temperature-controlled logistics and is offering services to global A-brands, private label producers and food retailers. The group turnover is > 1 billion $ and the company is active in America, Europe and Asia and owned by private equity. The owner is executing an aggressive buy-and-build strategy. Focus and positioning is mainly related to highly mechanized and automated assets & solutions and real estate development. The company is following a Finance, Design, Build, Operate and Maintain business model.

Situation

Gwynt was involved in the commercial due diligence process by the former owners and due to extended food logistics and technology expertise we were asked to support the executive board to map and evaluate different options for transport (management). The assets and activities of the company are part of a so-called Real Estate Investment Trust (REIT), whereby activities are divided into storage & picking related “good revenue” and value-added logistics & transport related “bad revenue”. In order to benefit from tax advantages deeper investigation was needed in what form and to what extend transport (management) activities contribute to an in- or decrease of the company value. A crucial part of the challenge was to find solutions for keeping or divesting transport activities in case of acquisitions of logistic companies.

Approach

Gwynt started with investigating a potential (mis)match between REIT-legislation and -policies versus different activities (storage, order picking, value-added logistics, transport). We continued by making comparisons between different transport management set-ups and the commercial (lock-in) and financial attractiveness of these options. A number of organisation models, value-proposities and marging calculations were detailed.

Results

Clarity was created between “good” and “bad revenue” in REIT-terms, including what wallet share can be included by transport activities for the company and what is the impact on the value of the company. A number of transport management system options were described and the financial impact was calculated. The preferred business model was detailed including business case, organisation and tools. Finally different co-operation models with transport and technology companies were described like in-house, joint venture or outsourced and next steps were defined.