German intralogistics company Jungheinrich AG is acquiring Indiana-based Storage Solutions Group, a leading US provider of racking and warehouse automation solutions, to gain better access to the attractive US warehouse and automation market, the company announced today.
Jungheinrich has signed a share purchase agreement with Merit Capital Partners, MFG Partners and the management of Storage Solutions for the acquisition of 100% of the share capital of Storage Solutions. The total consideration agreed under the share purchase agreement consists of a purchase price of approximately $375 million, subject to customary closing adjustments, and a flexible, performance-based component in the mid- to high-single-digit percentage of the purchase price, which is possible through the remaining management of Storage Solutions can be achieved three years after completion of the transaction, explained Jungheinrich. The acquisition will be funded with available cash and debt with limited leverage.
Headquartered in Westfield, Indiana, Storage Solutions is a US warehouse design, automation and integration company with 170 employees and 45 years of experience providing customers with turnkey solutions. Based on a technology-independent business model, Jungheinrich says the company has established a strong position in the attractive US warehousing market, which is benefiting from robust long-term growth dynamics. It offers unique vertically integrated service lines with in-house logistics and installation teams that ensure on-time project completion and provide value-added services such as workflow optimization, engineering and permitting, the company added.
For 2022, Storage Solutions is expected to report revenue of approximately $290 million and Adjusted EBIT of approximately $34 million.
Jungheinrich further stated that the acquisition greatly complements its global footprint and will further strengthen the company’s market position. Storage Solutions’ market coverage gives Jungheinrich access to important logistics centers in the USA and the opportunity to support the existing European customer base in this market. The acquisition of a growth platform in the USA also offers additional medium-term potential for establishing a presence in the neighboring countries of Canada and Mexico. The acquisition will accompany and not impact Jungheinrich’s existing partnership with Mitsubishi Logisnext Americas (MLA), which will remain Jungheinrich’s sole activity in the North American forklift market, Jungheinrich added.
Jungheinrich added that the acquisition will have an upfront positive impact on earnings per share, free cash flow per share and adjusted EBIT margin. The 2025+ target of achieving 20% of sales outside of Europe, primarily through inorganic growth, is underpinned by additional annual revenues of USD 300 million from Storage Solutions. Furthermore, Jungheinrich added, Storage Solutions’ service-oriented business model allows for an asset-light approach with limited investment requirements, thereby strengthening Jungheinrich’s cash generation and resilience.
“The acquisition of Storage Solutions is an important step in the implementation of our Strategy 2025+,” said Dr. Lars Brzoska, CEO of Jungheinrich. “It is an excellent opportunity to expand our geographic footprint in the US and add a strong strategic platform for growth in warehouse automation across the region. Storage Solutions is an established and successful company with an attractive customer base and an excellent management team. We see great opportunities in combining the warehousing and automation capabilities of both parties to the benefit of our customers in the US as well as our European customers with offices in North America.”
Kevin Rowles, Storage Solutions Chief Executive Officer, added, “The next stage of growth in our industry will be driven by an increasing need for warehouse automation. Storage Solutions has built solid shelving, automation and digitization capabilities that we plan to further build as demand continues to grow on strong fundamentals. Together with Jungheinrich, we look forward to jointly exploiting the potential for further growth.”
Jungheinrich’s Board of Management and Supervisory Board have approved the transaction. The closing of the acquisition, which is expected to occur in the second quarter of 2023, is subject to customary closing conditions, including receipt of United States merger control clearances.
Morgan Stanley & Co. International plc is acting as financial advisor to Jungheinrich and Freshfields Bruckhaus Deringer is acting as legal advisor, while Deloitte has provided support during the due diligence process. Baird is acting as financial advisor to Storage Solutions and Goodwin Procter LLP is acting as legal advisor.