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BA: WIND OF CHANGEMAERSK: BULLISH CALLXPO: HEDGE FUNDS ENGINEF: CHOPPING BOARDWTC: NEW RECORDZIM: BALANCE SHEET IN CHECKZIM: SURGING TGT: INVENTORY WATCHTGT: BIG EARNINGS MISSWMT: GENERAL MERCHANDISEWMT: AUTOMATIONWMT: MARGINS AND INVENTORYWMT: ECOMM LOSSESWMT: ECOMM BOOMWMT: RESILIENCEWMT: INVENTORY WATCH
BA: WIND OF CHANGEMAERSK: BULLISH CALLXPO: HEDGE FUNDS ENGINEF: CHOPPING BOARDWTC: NEW RECORDZIM: BALANCE SHEET IN CHECKZIM: SURGING TGT: INVENTORY WATCHTGT: BIG EARNINGS MISSWMT: GENERAL MERCHANDISEWMT: AUTOMATIONWMT: MARGINS AND INVENTORYWMT: ECOMM LOSSESWMT: ECOMM BOOMWMT: RESILIENCEWMT: INVENTORY WATCH
The UK’s Competition and Markets Authority (CMA), the country’s chief competition regulator, has delayed GXO’s takeover of Wincanton.
The CMA said today it had completed its ‘Phase 1’ investigation into the deal and concluded that it “could reduce competition in the supply of mainstream contract logistics services in the UK”.
GXO has been given five working days to “submit proposals to address the CMA’s concerns.
“If suitable proposals are not submitted, the CMA will progress to an in-depth Phase 2 investigation,” said a statement from the regulator.
Naomi Burgoyne, senior director of mergers at the CMA, said: “Contract logistics services are critical for the flow of goods around the country, reducing delays and ensuring that products reach their destinations efficiently and reliably.
“These services are essential for millions of people who rely on timely deliveries or being able to buy products off the shelf.
“This market is worth £16bn in the UK, and we’re concerned that this merger could reduce competition, resulting in higher costs being passed down to consumers.
“We consider these competition concerns warrant an in-depth Phase 2 investigation, unless GXO offers solutions which address them,” she explained.
The CMA’s chief concern appears to be the crossover of verticals in which both firms operate, particularly the UK’s retail market, according to its statement.
“The CMA’s investigation found that GXO and Wincanton compete closely, particularly for contracts with large retail customers.
“Although GXO will continue to face competition from other contract logistics providers, many of these are significantly smaller, or focus on specific industries or types of logistics services (such as transport).
“Although some businesses have the option to bring services in-house if contract logistics suppliers do not offer good value, the ability to do this varies by customer.
“The CMA is therefore concerned that the deal could raise costs for businesses that rely on contract logistics suppliers to move goods around the UK and for other supply chain activities,” it said.
In response, a GXO spokesperson said: “We are reviewing the decision and will continue to engage constructively and collaboratively with the CMA to secure a positive outcome.
“We strongly believe the transaction will deliver meaningful benefits for contract logistics customers in the UK, Europe and globally, and will support the UK government’s objective to drive economic growth by creating a more efficient and effective supply chain.
“The UK logistics market is highly competitive, and competition will remain robust for years to come. We remain confident of obtaining regulatory clearance and look forward to beginning to integrate our two great businesses.”
Listed on the London Stock Exchange (LSE), Wincanton was the subject of a fierce bidding war in the first quarter of the year between GXO and CMA CGM-owned Ceva Logistics. Ceva’s final bid of £802m was, in the end, bettered by GXO’s £960m, which the Wincanton board recommended to shareholders.
The company was subsequently delisted from the LSE, at the end of April. Following that, GXO executives stressed, during a May quarterly earnings call, that the main attraction of the takeover was Wincanton’s presence in the aerospace and industrial sectors.
Meanwhile, GXO itself may be a potential takeover target, according to capital market rumours doing the rounds this month.
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