Had my brother in law ask me this week about our industry (“Logistics”). He specifically mentioned some recent consolidations and buyouts ….XPO (Conway), UPS (Coyote), and Swift/Knight as the top 3 discussion points. He works with institutional capital, and the industry came up in some discussions he was having on future areas to look at.
Got me thinking about the one company that regularly is making moves that stir up the supply chain industry – Amazon
Question to myself with my unofficial crystal ball:
If AMZN were to dive into the transportation arena on an acquisition, who would be a likely candidate?
UPS or FEDEX – straight assed based acquisition – Market Caps (92B and 56B respectively)
Nah….too expensive to purchase, cannibalizes some of their resources to support customers, and assimilation into one driving force underneath the AMZN flag in my opinion not viable, and takes away from core business models.
CH ROBINSON – brokerage (asset light), plus IT/analytics acquistion. – Market Cap 9.45B
Maybe, still a big purchase, but they have alot of transactions every year (and growing), alot of data collection and analytic pieces that would be appealing, and as a direct competitor to them in the day to day arena I can personally say they are a formidable opponent.
Looking through Transport Topics, and recent articles about trucking, and came across an appealing play if I was to control the coffers of the M & A team in Seattle (which I don’t):
CELADON – assets, brokerage, Mexico, Canada, dedciated fleets –Market Cap – 63M(with an M as in Million, not Billion)
I say this is where they put their money.
* Get experienced people, drivers, systems and assets for a very small capital investment.
* Can run independent of Amazon in short term, and can be used as a beta test for AMZN regional dedicated fleets, forays into in-house brokerage plays (i.e. keep loads in house with CELADON trucks), and cross border asset moves.
* Could also run project/BETA type programs (last mile deliveries, reverse logistics, etc) outside of the microscope of all that follow Amazon.
* Company has had some recent financial setbacks
* Does have some accounting “issues” they need to figure out
* has some divisions that would probably get jettisoned, or have to be addressed as part of the purchase (equipment leasing divsion, non core transportation branches)
Celadon has cap of 65million (say $30 million to control the stock) to get drivers, trucks, systems, infrastructure, experience and a foothold into the trucking arena.
AMZN spent at least $580 million on Souq (AMZN 10q from March 2017) so take 1/20th of that amount and dive into Celadon.