Exel acquires leading US automotive logistics company
Coughlin, formed in 1956, provides integrated supply chain solutions, primarily to the automotive industry, including national and international freight management, customized packaging solutions and specialist contract logistics services. Coughlin's customers include Ford, Jaguar, Visteon, DaimlerChrysler and General Motors. Headquartered in Detroit Michigan, Coughlin has overseas operations in the UK, Mexico, Canada, Germany, Netherlands and Australia.
The consideration will take the form of an initial cash payment of $140m (£95m), assumed debt of $21m (£14m), and a further $40m (£27m) of deferred payments linked to customer retention over a three-year period. Potential further payments of up to $130m (£88m) will be made if the performance of the business significantly exceeds current profitability. Any further payments will have the effect of reducing the EV/EBIT multiple of the acquisition on achieved earnings. Net tangible assets as at 31 December 2000 were $9m (£6m). Goodwill arising on the transaction will be deductible for tax purposes over 15 years. In the year to 31 December 2000 Coughlin made underlying operating profits of $20m (£11m), after adjusting for one off charges that are not expected to recur.
In recent years the automotive industry has been leading the development of advanced supply chain services, the demand for which has continued to grow strongly. This trend is expected to continue.
Exel has been successful in building a strong automotive logistics business in both Europe and the Americas focused on core skills in inbound logistics and after-market spares management. Increasingly, higher value products are being shipped longer distances, just-in-time to ensure lower supply chain inventories while maintaining delivery performance. Coughlin has developed impressive capabilities that provide door to door time definite services to its customers. With automotive supply chains becoming more integrated and more global, the addition of Coughlin significantly increases Exel's ability to offer an international integrated solution to the automotive industry.
Joe Coughlin, Chief Executive and major shareholder of Coughlin commented: "Coughlin's integrated logistics system is now joined with the leading global logistics provider. Our customers will be the beneficiaries of this extended global reach."
John Allan, Chief Executive of Exel, commented: "Coughlin provides a significant opportunity for Exel to strengthen its presence in the global automotive market. Coughlin's range of services and strong customer relationships will enhance Exel's position with major automotive manufacturers and will support the Group's objective of strong medium term growth."
Source: Exel, London