A.P. Moller Maersk set to acquire Performance Group

In a move geared towards augmenting its end-to-end supply chain service offerings, Copenhagen, Denmark-based A.P. Moller Maersk, an integrated container logistics services provider, said yesterday it inked an agreement to acquire El Segundo, Calif.-based Performance Team, a provider of warehousing and distribution services.

The purchase price for the acquisition is $545 million, and it is expected to close by April 1. Maersk officials said that until obtaining required regulatory approvals and closing of transaction, Maersk and Performance Team will remain two separate companies and conduct business as usual.

Established in 1987, Performance Group operates 24 warehousing sites that cover 800,000 square meters across its strategic supply chain locations. The company main focus is on B2B and B2C distribution service offerings for various sectors, including retail, wholesale, and e-commerce. Performance Group has seen 17% growth per year over the last four years and its 2019 revenue was $525 million.

Maersk said that Performance Team is known for its warehousing fulfillment services, e-commerce, inland transportation and distribution services, adding that its key strengths are their fulfillment services and distribution capabilities to customer warehouses and stores. The company’s main locations are in Los Angeles/Long Beach, New York/New Jersey, Miami, Charleston and inland centers.  And its transportation service fleet is comprised of owned, leased and rented units with Maersk also noting that Performance Team’s people are known in the market for their strong engineering and operating process focus.

“With this acquisition we invest in premium operational capabilities to significantly boost our existing Warehousing & Distribution offering,” said Vincent Clerc, CEO of Ocean & Logistics at A.P. Moller –Maersk, in a statement. “This will strengthen our ability to deliver products and solutions that meet our customers’ end-to-end supply chain needs. With its strong platform, Performance Team is a good match for A.P. Moller - Maersk as they complement our current Warehousing & Distribution proposition to customers in North America and will enable future growth.”

Maersk officials said that main driver for this acquisition is that it views warehousing and distribution as a key component, in order to provide more supply chain options and flexibility for its ocean shipper customers. Taking that a step further, they explained that the global size of the warehousing and distribution sector is estimated at more than $200 billion, with North America alone at $50 billion according to data from Transport Intelligence. What’s more, they added that there is a significant growth opportunity for third-party warehousing and distribution players, given that a small part of the North American warehousing and distribution sector is being outsourced, with e-commerce growing at a 12% annual rate.

Tom Boyd, Maersk Inc. North America Communications Manager, told LM that the company’s North American-based customers have a very high supply chain sophistication, which led to Maersk wanting to add more warehousing and distribution capacity to complement its current Maersk Warehouse & Distribution capabilities to better serve them.

“In our talks with customers and our own analysis, Performance Team is a well-run service business that has the people, information systems and locations that fit our W&D ambitions and our customers,” Boyd said. “There is a strategic fit to our existing Maersk Warehousing & Distribution product by strengthening our capabilities—enabling us to offer customers more services, more
 warehouse space, more trucking capabilities and an improved, modern information 
system to manage their supply chain.”

When asked what the biggest benefits of this deal are for Maersk customers, Boyd said that Maersk is creating more choices to supply chains by creating an attractive warehousing and distribution option with 46 different locations, and he also noted that the capacity and proven performance will play a central role for Maersk’s retail customers that are focused on e-commerce growth in 2020 and ways to manage their distribution center network.

As for what Performance Group brings to Maersk that Maersk may have been lacking, Boyd explained that the companies offer a lot of the same services, with the caveat that the combining of two proven performers provides shipper customers with additional confidence in their supply chain partner.

“By offering more locations and more capacity for W&D services and inland trucking, we give supply chain managers more options to handle the flow of their omnichannel business. This gives them a competitive edge,” he said. “We see this as a strategic step in our North America landside supply chain service growth. In talks with our customers, they are always looking to find more ways to optimize their supply chains. We believe with this acquisition we are creating more distribution centers (46 combined) to choose from, more fulfillment capabilities for e-commerce growth and more inland trucking capacity to serve them.”

This deal received strong endorsements from two leading supply chain experts.

“Maersk is buying a market leader in California-based warehousing and logistics,” said Ben Gordon, Managing Partner of Cambridge Capital, an investor in niche supply chain leaders and also Managing Partner of BGSA Holdings, a leading mergers and acquisitions advisory firm focused on the transportation, logistics, and supply chain technology sectors.

“Performance Team is particularly strong in the retail sector. This deal matches Maersk’s stated goal of expanding in logistics. It also gives Maersk more strength in the port markets of LA. These services are a natural adjacency for Maersk’s shipping services, so they can control freight before and after it goes onto a ship.

Gordon also observed that there are only a handful of logistics companies left that have real scale, noting that Performance Team was one of the last remaining family-owned companies in this sector, as the industry is migrating to global giants like Maersk, corporate consolidators like XPO, and private equity backed platforms like Transplace and GlobalTranz.

Evan Armstrong, president of supply chain consultancy Armstrong & Associates, said that this acquisition makes a lot of sense and is very complementary in supporting Maersk Logistics’ U.S.-based 3PL operations.

“With revenues of $525M, Performance Team manages key retail deconsolidation and distribution operations on the West Coast, Southeastern US, and in Dallas, New York, and New Jersey,” said Armstrong. “Its industry focus matches well with Maersk, with key accounts in retailing, home goods, apparel/footwear, and consumer electronics. Performance Team provides direct store delivery transportation services from all of its locations. This acquisition will further extend Maersk Logistics end-to-end retail distribution and transportation management capabilities.”