Groupe CAT in talks to buy STVA

Groupe CAT has reported that it is in negotiations with SNCF Logistics to buy the latter’s finished vehicle logistics subsidiary STVA. A statement released by Groupe CAT on Friday (28 April 2017) commented that it had “entered into an exclusive negotiation with SNCF Logistics for the purchase by CAT of STVA”. The release continued “on condition that these negotiations are successful and that the relevant authorizations are given, the Groupe CAT would integrate STVA in its organization, thus pursuing its strategy of external growth in order to become one of the European leaders in finished vehicle logistics.”

STVA is one of the largest handlers of finished vehicles in Europe, moving 2.8m cars in 2016. It operates an in-house fleet of rail carriages as well a fleet of car-carrying trucks. It has also developed a network of subsidiaries across Europe, although these tend to be less asset-heavy and with a higher percentage of road freight activity than its French operations. Superficially, STVA has a good position in the market for finished vehicle logistics. French railways could potentially act as a link between Germany and production locations in Spain, markets in the UK as well serving French production. However historically it struggled with poor performance and the competition of short-sea shipping. 

SNCF Logistics has been wrestling with its profitability for several years, although it achieved a profit in 2016 and STVA has seen positive operational numbers as well, although it has recently been hit by anti-competition fines. The assumption must be that STVA is no longer viewed as central to SNCF’s strategy. This is a little surprising, although the fact that the sale is to another French company may soften the blow. That said, Deutsche Bahn’s equivalent finished vehicle business is a key part of its cargo business.

Groupe CAT on the other hand has been remarkably successful in rebuilding its business since its near-death experience in 2007. Originally the in-house logistics provider of Renault, it has grown both through its relationship with Renault-Nissan and by gaining other vehicle manufacturers custom across Europe. In 2016 it had revenues of €1.2bn.

Several years ago it indicated that it wished to develop its business model by shifting towards greater exposure to physical assets and the move to buy STVA appears to be an extension of this approach. It also reflects a trend towards the use of rail, particularly by German vehicle manufacturers. Buying STVA would be a good way to achieve this, not least by merging Groupe CAT’s existing European network, which is heavily orientated to road freight.

Source: Transport Intelligence, May 2, 2017

Author: Thomas Cullen