UK M&A supply chain & logistics activity Q1 2024

In the first quarter of 2024, the UK logistics market saw a return in deal appetite for logistics and supply chain management businesses, making it a prime destination for global investment. Despite a slight decrease in the number of transactions, the total disclosed deal value increased significantly, indicating a strong interest in the sector.

Key trends in UK logistics M&A activity during Q1 2024 include:

• Cross-border activity: A significant 38% of deals in the sector were cross-border, highlighting the interest of international investors. High-profile transactions included Elanders' acquisition of Bishopsgate Specialist Logistics, Yusen-owned ILG’s acquisition of Global Freight Solutions, and Hapag Lloyds’ acquisition of ATL Haulage Contractors.
• Slight decrease in deal volume: There was a marginal decrease in the number of transactions completed in Q1 2024, with 26 deals compared to 27 in the previous quarter.
• Increase in deal value: The total disclosed deal value rose to £372 million, a substantial increase from £53 million in the previous three months.
• Tech-related deals: 42% of deals were tech-related, showing that innovation is a driving force in the market. Companies are seeking to optimize operational performance to improve margins. Venture capital is targeting next-generation technology and growth, with investment activity within robotics and drone delivery operations gaining momentum.
• Strategic acquisitions: There was an increasing number of bolt-on strategic acquisitions to bolster business growth and build scale.
• Lack of primary private equity investment: There was a noticeable lack of primary private equity investment, with only one direct investment deal during the quarter by HIG, which acquired DX Group. Private equity firms appear to be waiting for clearer signs of industry-wide trading performance improvement before committing to new investments. However, private equity-backed or cash-rich logistics firms continued to consolidate, developing their buy-and-build strategies.
• Drone technology: There is growing interest in drone technology, with the argument that it is paving the way for a revolution in delivery services by enhancing speed, efficiency, and accessibility.
• Specific deals: Other deals included London-based Skyports Series C funding, led by Spain-based ACS Group, to advance Skyport’s infrastructure and drone service business. Additionally, UK logistics company EFS Global acquired pallet and parcel distribution specialists, and Yodel Delivery was acquired by a new company backed by a consortium of investors.

In summary, the UK logistics market in Q1 2024 experienced a dynamic period with a focus on cross-border deals, tech-driven innovation, and strategic consolidation. Despite a slight dip in the number of transactions, the significant increase in deal value and the growing interest in emerging technologies indicate a robust and evolving sector.