Logistics Software Company Acquisition

The Canadian Descartes Systems Group has just bought out UK-based Impatex Freight Software Limited, and over 200 British customers with them.

Descartes bought Impatex outright for £5.1 million. The Impatex purchase has brought some 200 UK freight forwarding customers under the Waterloo, Ontario based logistics software provider’s banner.

Edward Ryan, CEO for Descartes says that the takeover strengthens Descartes’ regulatory and customs compliance platform and lets them offer a broader set of services to UK customers. He says the move establishes his company as ‘the’ global network for collaborative supply chain and logistics processes.

But what does this mean for Impatex’s former customers? Many will ride out the takeover and hope for the same or better service from the new, larger provider, and hope to profit from the promised synergy. Others may struggle to find the same services elsewhere. Some feel that Descartes may be biting off more than they can chew, especially with their third quarter earnings already low after an earlier round of acquisitions. Spending £5 million on Impatex at the same time as acquiring Swiss supply chain integration company Compudata for £10.8 million (16 million Swiss francs) just may cripple the multinational logistics provider, or force it to sell off those parts of its new acquisitions that don’t fall under its areas of expertise.

Descartes third quarter earnings fell 29% compared to last year’s figures due to restructuring after acquiring KSD Software Norway. What will this additional expansion end up costing them, and will the stock holders be willing to weather the storm until these new purchases begin making Descartes the profits they predict?

Descartes’ actual revenue for the third quarter increased by 6.1 million USD, so it is more than possible that they will end the fourth quarter well even if digesting their new acquisitions forces another reorganisation. They could indeed be a company to watch in the coming year.

 


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