EU Green Lights CMA CGM’s $5B Acquisition of Bolloré Logistics

 

Competition regulators at the European Commission approved the proposed acquisition of Bolloré Logistics by CMA CGM Group after the companies agreed to some minor divestments to address competition concerns. It comes at an opportune moment for the group which today highlighted the relevance of its strategy of diversifying and expanding logistics as it reported a dramatic decline in earnings reflecting what they termed the “gradual deterioration in the maritime shipping environment throughout 2023.”

Approval of the acquisition of Bolloré Logistics is conditional on the companies completing several agreed upon steps. An independent monitor is being appointed to ensure that they proceed with the steps, which require divesting all Bolloré Logistics' activities in Guadeloupe, Martinique, Saint Martin, and French Guiana as well as assets in France that supported these activities.

The Commission reports its investigation showed that the merger, as initially notified, would have reduced competition in the markets for the provision of sea freight forwarding services in Martinique, Guadeloupe, and French Guiana. They expressed concerns for a potential dominance as CMA CGM’s container business on routes from those locations to Europe was linked with Bolloré Logistics' freight forwarding activities in those territories. 

They concluded the combination would come at the expense of rival freight forwarders in those regions, but accepted the companies’ proposal to divest those operations. They wrote in the approval, “These commitments fully address the competition concerns identified by the Commission, by removing the vertical link between CMA CGM's container liner shipping activities and Bolloré Logistics' sea freight transport activities in the concerned territories.”

The authorities in French Polynesia expressed similar concerns for their territory. They also initially objected to the acquisition but agreed to approve it after the companies agreed to divest the maritime activity of Bolloré Logistics Polynesia as well as the activities of Bolloré Logistics France relating to French Polynesia.

Reporting fourth quarter and year-end results today, Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, highlighted that the logistics portions of the group were proving “more resilient, and accounting for a significant part of our business.” He highlighted that with the Bolloré Logistics acquisition, the group will become one of the world's top five providers of transport and logistics services. He noted that it would follow the acquisition of CEVA Logistics in 2019, and Ingram Micro CLS, Colis Privé, and GEFCO in 2022.

For the year, CMA CGM’s revenues were down by more than a third to $47 billion while net income was down 85 percent to $3.64 billion. The group reported a small loss for net income in the fourth quarter.

Saadé, however, noted that while the results were down, it was “as we expected,” and that the group's performance “remained solid in 2023.” Pointing to the strategic investments including Bolloré Logistics and terminals, La Méridionale, and the consolidation and launch of its car carrier business, he said the group is positioned to weather an uncertain 2024. “Our Group now stands on two solid pillars, which will enable us to weather cyclical changes more efficiently,” concluded Saadé.