Logistical froth

21 June 2016 By Olaf Storbeck

Europe’s largest forklift maker Kion is paying $3.3 billion for U.S. logistics tech company Dematic. That’s 20 times last year’s operating profit. To earn its cost of capital, the buyer might have to wait until 2020 and make rosy assumptions on revenues, margins and synergies.

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German forklift truck and robotics maker Kion has agreed to buy U.S. firm Dematic to expand into the market for automated warehouses and supply chains, which has ballooned with the growth of e-commerce.

Kion is valuing Dematic at $3.25 billion including debt. The buyer plans to finance the transaction with a 3 billion euro bridge loan, which it will refinance with a combination of equity from a capital increase, long-term capital markets debt and bank loans.

Major shareholder Weichai Power, which owns 38 percent of Kion, fully supports the plan to increase capital by up to 10 percent, Kion said.

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