Heavy transport players have generally welcomed the merger of two of the three largest providers in the space — Mammoet and ALE — but they question how the merger would affect Sarens, the third major company in the engineered heavy-lift market.
Dutch titan Mammoet confirmed it had signed an agreement at the end of last week to take over British-based ALE. Although the deal is subject to approval of the relevant regulatory authorities and both companies declined to give further details on a possible completion date or the regulatory bodies involved when contacted by JOC.com, Mammoet said the two firms will continue to operate independently until the takeover is confirmed officially.
“It’s like the grand old lady and the new kid on the block ganging up against their brother. ALE has grown exponentially, taking over several smaller firms over the last few years, so it’ll be interesting to see how the cultures fit together,” a senior executive with a global engineering contractor told JOC.com.
Sarens did not immediately respond to requests for comment on the deal, but the executive noted that the Belgian firm “does lack an obvious takeover candidate. There is still a large number of players in the market, but they are regional or niche players, so I do think it will be difficult for Sarens to respond to the Mammoet-ALE deal.”
A merger of ‘monstrous’ proportions
The engineering executive said he was surprised to see Mammoet and ALE specifically join forces but added that merger and acquisition activity is to be expected given the current state of the heavy transport industry. More to the point, he said the newly combined Mammoet-ALE “is going to be a monster in terms of equipment and service.”
Mammoet and ALE are global specialists in engineered heavy lifting and transport, with the number of cranes, chassis, and trucks running into thousands, including the biggest on the market. The firms provide the transport and lifting capacity for engineering contractors and freight forwarders involved in the petrochemical, renewable energy, power generation, civil construction, and offshore energy industries.
A senior project cargo executive at a major freight forwarder told JOC.com that not only does the merger make sense for Mammoet and ALE, it could also prove advantageous for forwarders. “It could be beneficial for us,” he said. “The merger could offer better coverage around the globe that could drive down mobilization costs.”
The forwarding executive added this wider global spread would improve safety because his firm could be less reliant on regional or local players who find it challenging following his group’s safety rules and operational guidelines.
The proposed merger comes amid renewed optimism about an uptick in the heavy engineering transportation market, with a raft of energy and petrochemical projects planned or awaiting final investment approval. “The timing is interesting because there’s a potential market upturn, giving ALE the opportunity to maximize its price,” the contractor executive told JOC.com
The contractor executive said the timing could also be linked to the United Kingdom’s looming departure from the European Union — also known as Brexit — now scheduled for Oct. 29. He believes the merger would have to be approved by the European and US authorities and theorized that ALE may have worried about the ease with which it could work outside the UK after Brexit and decided a move to the Netherlands would mitigate some of those risks.
Both executives thought the deal could spur further consolidation within the heavy-lift transport sector.
The freight forwarding executive speculated that there could be job cuts as the two firms bring together their various teams but said affected employees could potentially be snapped up by forwarders keen to improve their own in-house heavy-lift and project management expertise. Mammoet has about 5,000 staff and ALE about 1,500 employees.
Contact Keith Wallis at firstname.lastname@example.org.