Deutsche Post Buys Drinks Shipper Hillebrand for $1.8 Billion

(Bloomberg) -- Deutsche Post AG agreed to buy fellow German logistics specialist J.F. Hillebrand Group AG for 1.5 billion euros ($1.8 billion), boosting its position in the lucrative beverage-transportation market.

Hillebrand was founded 175 years ago as a carrier of wine barrels, and also moves beer, spirits, dairy products, olive oil and bulk liquids. The purchase, announced Tuesday, is Bonn-based Deutsche Post’s biggest since the 2005 acquisition of U.K. freight group Exel Plc for $7 billion.

Adding Hillebrand will strengthen Deutsche Post’s seaborne containers unit, which has struggled to match growth at its DHL express-parcels arm triggered by surging demand for online shopping during the pandemic. The group is competing with Sinotrans Ltd. of China for second spot in the oceanic freight forwarding market, behind Switzerland’s Kuehne + Nagel International AG. 

Deutsche Post Chief Executive Officer Frank Appel said in a statement that the company’s financial strength despite the coronavirus crisis has allowed it to “pursue quality investments,” expanding the maturing freight-forwarding business with an acquisition “highly complementary to our existing portfolio.”

The stock closed 1.4% higher at 58.51 euros in Frankfurt, extending gains this year to 44%, the best performance on Germany’s benchmark DAX index.

Mainz-based Hillebrand employs 2,700 people and generates annual revenues of 1.4 billion euros, according to its website. Deutsche Post said the specialty liquids sector in which it operates is generally more profitable than the freight-forwarding industry as a whole.

Bloomberg reported earlier this month that Deutsche Post was in discussions with Hillebrand’s private-equity owner Cobepa of Belgium about a deal. Cobepa bought the German company in 2006.

Deutsche Post has pledged investment in core logistics businesses under its Strategy 2025 growth plan. The mail operator will fund its purchase of Hillebrand with available cash, which stood at 3.89 billion euros as of June 30. The acquisition is expected to immediately increase earnings and cash flow.

Appel had avoided large deals since becoming CEO in 2008, when he was required to unwind the ill-fated takeover of assets of U.S. express operator Airborne Inc. at a cost of more than the $1.2 billion purchase price. He has, though, bolstered the freight-forwarding division by poaching Tim Scharwath from K + N in 2017.

Deutsche Post is enjoying multiple tailwinds from Covid-19, with lockdowns not only boosting online purchases but also lifting air-cargo rates to the benefit of its air-freight arm.

©2021 Bloomberg L.P.