Third-party logistics (3PL) company Exel made an offer last month for British rival Tibbett & Britten (T&B) for approximately $598 million. The two companies will have combined global revenues of more than $12 billion.

"It's logical for these two British firms to consolidate," says 3PL analyst Richard Armstrong of Armstrong & Associates in Stoughton, Wis. "Geographically speaking, this helps both companies."

The merger will keep Exel at the head of the pack in a competitive market, says Dr. Robert C. Lieb of Boston's Northeastern University, who authors an annual study of contract distribution providers and their customers. "They [3PLs] all talk about achieving scale to realize economies," says Lieb. "This allows Exel to maintain its position among the top players in the world."

According to Armstrong & Associates, Exel is the fourth-largest 3PL in North America based on revenues, ringing up $2.6 billion ($8.12 billion worldwide) in annual sales. Tibbett & Britten is ranked 18th in North America with annual revenues of $1 billion ($2.9 billion worldwide).

In the United States, Tibbett & Britten has focused on the grocery market while Exel has a broader base of customers. "T&B has some great clients [in the United States], such as Kroger and Wal-Mart, which will prove valuable to Exel," says John Manners-Bell, chief analyst at Transport Intelligence, a British market- analysis firm. "I don't believe that there are that many common clients in the U.S. shared by Exel and T&B, so the risk of client loss is not that great."

Manners-Bell says he doesn't expect the acquisition to have major implications for U.S. shippers operating on a purely domestic basis, but it will be a different story when it comes to international services. "Exel has recently strengthened its offering on the Asia-Pacific ocean routes, which could see it try to capture more U.S. retailers' total supply chain spend," he says. Exel also will be looking to cross-sell its global forwarding services to Tibbett & Britten's customers, he adds.

T&B's existing clients, in fact, are likely to benefit most from the acquisition. "T&B North America will become part of a much bigger group with the resources to support further investment and product development," says Manners-Bell, "so the whole experience should be broadly positive."