Kion buys Dematic in £1.4bn shake-up

The Kion Group, which owns forklift brands such as Linde and Still, has acquired the automated logistics solutions supplier Dematic in a bid to create a global leader in intralogistics solutions.

The deal aims to position the Kion Group as a global leader in Intralogistics 4.0 and take it closer to its 2020 strategy aim of significantly closing the gap between itself and global material handling leader Toyota Industries.

The details

The combined firm will have around 30,000 employees and earned approximately €6.7 billion (£5.15bn) in revenue for the calendar year 2015. The transaction is expected to close in Q416.

The Kion Group is now a one stop shop supplier from simple pallet trucks to the largest and most complex automated warehousing projects. In the past year, the Kion Group already started to build up a strong position as provider of automated systems solutions by acquiring Egemin Automation and Retrotech. After closing of the transaction, Dematic will be integrated into the Kion Group forming an additional fifth operating unit, which will also comprise Egemin and Retrotech.

Dematic will leverage the Kion Group's service network and brand reputation in key markets like Europe, China and Brazil, whereas Kion will take advantage from Dematic’s strong position in the US and European automation markets in particular.

The impact

Experts see the acquisition begin driven by changes in retail patterns and anticipates further consolidation.

Roger Platt, principal consultant at LCP Consulting explains: “Rapidly changing demands in retail and Omni-channel logistics have been a key driver in this deal. Widespread adoption of mobile devices, ordering on the go and the increasing ability to select a home, store or other convenient collection point, combined with the need to contain costs, is transforming the automation of fulfilment channels.

"Many equipment suppliers are reporting strong order books and Kion estimates the supply chain automation market will grow by 10% by 2019. Therefore the acquisition of Dematic, already a provider to companies such as Amazon and Walmart, would seem a good move. Kion also see this deal as an opportunity to sell more forklifts as the customers are the same.

"This deal also complements last year’s acquisition of the handling automation division of Egemin, and for Dematic's future clients the additional security of becoming part of a larger industrial group could be considered a positive development. 

"Further consolidation is likely in this growing market.”

{EMBED(739363)}

The deal is part of a trend of large conglomerates, often but not always focused on older technology such as industrial trucks and machinery, targeting automated logistics suppliers for acquisition. 

Highly diverse manufacturer Honeywell spent £1.13 billion ($1.5bn) US warehouse automation firm Intelligrated, which supplies automated picking and conveying systems as well as Warehouse Execution System software and Order Fulfillment solutions. Toyota Industries is understood to have competed closely with Honeywell in a bid to land Intelligrated.

Honeywell is a familiar name in intralogistics, particularly following its 2012 acquisition of Intermec which brought handhelds and voice solutions, via Vocollect, into the business.

"E-commerce continues to grow at an unprecedented rate and customer demands for faster delivery times have created a need for warehouse, logistics and fulfillment solutions that can increase productivity and lower costs for our customers,” says Alex Ismail, president and CEO of Honeywell Automation and Control Solutions. “This acquisition fits with our vision for a connected industrial company and a connected worker.”

In 2014 Japanese machinery manufacturer Murata Machinery (Muratec) acquired automation player Cimcorp, with, again, the aim to to create a one stop shop for material handling automation.

Also in 2014, industrial robot manufacturer KUKA bought automaton specialist Swisslog for $357 million (£244m). The companies have since co-operated on logistics robot development. Furthermore, German engineering group Voith has agreed to sell its 25.1 per cent in Kuka to China’s Midea, which has made a €4.6bn bid for the German robotics leader. Midea has revenues of approximately US$24.8 billion and is primarily known for selling home appliances and air conditioning.

{EMBED(739368)}