Descartes Acquires Kontainers

Rhea-AI Summary

Descartes Systems Group (Nasdaq: DSGX) has acquired Kontainers, enhancing its digital freight execution capabilities. Based in the UK, Kontainers specializes in client-facing digital freight platforms that streamline quoting, booking, tracking, and analytics for logistics service providers (LSPs). The acquisition, valued at up to $12 million, includes $6 million in upfront cash and performance-based considerations. This move aims to accelerate digitization in logistics, allowing LSPs to improve customer experiences while managing tight profit margins in a rapidly changing market.

Positive

• Acquisition of Kontainers enhances Descartes' digital freight execution capabilities.
• The move streamlines customer experiences for logistics service providers.
• Potential revenue growth through performance-based earn-outs linked to Kontainers' revenue targets.

Negative

• Acquisition cost of up to $12 million may strain financial resources if performance targets are not met.
• Integration challenges could arise from blending Kontainers' technology with Descartes' existing systems.

Strengthens Digital Freight Execution Capabilities on the Global Logistics Network

WATERLOO, Ontario, June 11, 2020 (GLOBE NEWSWIRE) -- Descartes Systems Group (TSX:DSG) (Nasdaq:DSGX), the global leader in uniting logistics-intensive businesses in commerce, announced that it has acquired Cracking Logistics Limited dba “Kontainers”, a leading provider of client-facing digital freight execution platforms.

Headquartered in the UK, Kontainers transforms the customer experience for carriers, freight forwarders and third-party logistics service providers around the world. Kontainers’ solutions facilitate a fully digital customer experience including quoting, booking, tracking and dashboard analytics. The company’s digital freight platform enables these logistics services providers (“LSPs”) to rapidly create branded state-of-the-art digital experiences for their end customers. Kontainers’ technology also helps API-enable LSPs while preserving their investments in existing rate management and back-office systems.  

“We’ve worked very hard with some of the world’s top logistics companies to create an optimal digital customer experience,” said Graham Parker, co-founder of Kontainers and now VP Sales Digital Freight Solutions at Descartes. “Our team of domain experts is thrilled to combine with Descartes, which will give us the opportunity to reach a broader audience much more quickly. When added to the Global Logistics Network, we’ll also have the ability to offer a pre-integrated solution that combines Kontainers digital freight execution with Descartes’ rate management and forwarder enterprise systems.”

“The last few months have shown how quickly the world can change, and the shift to digitization is accelerating as a result,” said Edward J. Ryan, Descartes’ CEO. “Logistics services providers operate on tight margins. Those that don’t move quickly to digitize their customer experience will be faced with higher costs to serve. Without the proper real-time connections between client-facing platforms and the quoting, rating and booking systems that this digitization brings, LSPs will struggle to efficiently meet customer demand in today’s dynamic market. We’re looking forward to working with the Kontainers customers, partners and team of domain experts to help the logistics community capitalize on this opportunity.”

Kontainers is headquartered in the UK. Descartes acquired Kontainers for total consideration of up to $12m, with up-front consideration of $US 6.0 million, plus potential performance-based consideration. The up-front consideration was satisfied from cash on hand. The maximum amount payable under the all-cash performance-based earn-out is $US 6.0 million, based on Kontainers achieving revenue-based targets in each of the first two years post-acquisition. Any earn-out is expected to be paid in fiscal 2022 and fiscal 2023.

About Descartes Systems Group
Descartes (Nasdaq:DSGX) (TSX:DSG) is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses. Customers use our modular, software-as-a-service solutions to route, schedule, track and measure delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world's largest, collaborative multimodal logistics community. Our headquarters are in Waterloo, Ontario, Canada and we have offices and partners around the world. Learn more at www.descartes.com.

Global Media Contact
Carah Strohack                                                                  
Tel: +1(800) 419-8495 x202025                                            
cstrohack@descartes.com

Cautionary Statement Regarding Forward-Looking Statements
This release contains forward-looking information within the meaning of applicable securities laws ("forward-looking statements") that relate to Descartes' acquisition of Kontainers and its solution offerings; the potential to provide customers with client-facing digital freight execution platforms; other potential benefits derived from the acquisition and Kontainers’ solution offerings; and other matters. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the factors and assumptions discussed in the section entitled, "Certain Factors That May Affect Future Results" in documents filed with the Securities and Exchange Commission, the Ontario Securities Commission and other securities commissions across Canada including Descartes most recently filed management's discussion and analysis. If any such risks actually occur, they could materially adversely affect our business, financial condition or results of operations. In that case, the trading price of our common shares could decline, perhaps materially. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

FAQ

What is the purpose of Descartes' acquisition of Kontainers?

The acquisition aims to enhance digital freight execution capabilities and improve customer experiences for logistics service providers.

What is the total value of the Kontainers acquisition?

The acquisition is valued at up to $12 million, including an upfront payment of $6 million.

When will the performance-based earn-out for Kontainers be paid?

The earn-out is expected to be paid in fiscal 2022 and fiscal 2023, based on revenue achievements.

How will the acquisition impact Descartes' logistics services?

The acquisition is expected to help logistics service providers digitize their customer experience, potentially improving operational efficiency.

What challenges might Descartes face from the acquisition of Kontainers?

Integration challenges could occur while merging Kontainers' platforms with Descartes' existing systems.