Kion, Dematic Merge in Pursuit of Top Spot in Logistics Automation

Consolidations and investment are continuing in logicstics automation, as companies cooperate across borders in pursuit of a vibrant market. Materials handling company Kion Group AG this week said it plans to acquire supply chain company Dematic Group Corp. for $2.1 billion.

Atlanta-based Dematic provides integrated automation, software, and services for the logistics industry. Its offerings include automated guided vehicles (AGVs) and storage, sorting, and picking equipment.

Dematic has close to 6,000 employees, including 3,000 engineers, and it is currently owned by AEA Investors LP and the Ontario Teachers’ Pension Plan. The company has 100 locations in 22 countries.

In February, Dematic moved cited productivity when it moved operations from Grand Rapids, Mich., to Mexico.

Logistics automation market growing fast

Wiesbaden, Germany-based Kion Group has about 23,500 employees worldwide and earned revenue of €5.1 billion ($5.74 billion) last year. Under its seven brands, the company makes forklifts, as well as fleet-management systems and self-driving vehicles for warehouses.

The market for automated material handling equipment will grow from $26.02 billion last year to $44.68 billion by 2022, predicts Markets and Markets. This growth is attributable to demand for automated forklifts in developing countries, vehicle fleet modernization, and the need for greater efficiency to support e-commerce, according to Global Industry Analysts Inc.

Consumer demand for ever-greater convenience, shorter cycle times for online retailers, and decentralized distribution centers should encourage the adoption of robots, Kion said.

An automated Dematic storage system moves containers.

One contested segment of e-commerce is online groceries. Peapod Inc. is running Dematic software at a new fulfillment center as it competes with Amazon.com Inc. and Fresh Direct, said The Wall Street Journal.

In addition, automation is becoming more affordable, can reduce safety hazards in factories and warehouses, and could deliver useful information through the emerging industrial Internet of Things, said Scott Stone, an advertising and e-business manager at Cisco-Eagle Inc.

The Kion-Dematic deal is just the latest in a busy supply chain automation market. In February, iFuture Robotics Pvt. Ltd. won the QPrize-Make in India contest and $300,000 from Qualcomm Ventures for its Ark Robot warehouse automation system.

Similarly, Swisslog, which had been acquired by Kuka Robotics Corp., recently bought Power Automation Systems, a pallet storage and retrieval provider, for an undisclosed amount.

Boston-based Wincove Partners sponsored a recapitalization of Aloi Solutions LLC, an automation and materials handling company in Rochester, N.Y. Aloi is also a FANUC integrator.

Last month, Locus Robotics Inc. raised $8 million in Series A funding. Andover, Mass.-based Locus produces a robot that it says is more affordable and efficient than Amazon’s Kiva.

Kion wants to be No. 1 for Industry 4.0

Kion wants to move further into supply chain automation, which is expected to grow at 10 percent annually through 2019, said CEO Gordon Riske in a call with investors and analysts.

“We are becoming a unique provider of products, services and solutions,” said Riske. “Like no other company in our industry, we can accompany every customer seamlessly on its journey to Industry 4.0 and Intralogistics 4.0 now and everywhere.”

Kion previously acquired warehouse automation firms Egemin NV and Retrotech Inc. for $40 million, plus Australia-based NDC Automation for an undisclosed amount. Dematic will become an operating group within Kion.

The combined company would be “a global leader in Intralogistics 4.0” and have revenue of €6.7 billion ($7.58 billion). Kion and Toyota Motor Corp. are already the market leaders for industrial trucks.

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Kion, whose biggest shareholder is China-based Weichai Power Co., also hopes to expand in the North American and European automation markets, where Dematic has a strong presence. Dematic would be to use Kion’s network in China, Brazil, and Europe.

“Kion Group and Dematic together will design and deliver solutions that better position our customers to respond to dynamic demand,” said Ulf Henriksson, CEO of Dematic. “Together, Kion Group and Dematic will jointly define a new era in material-handling solutions.”

The companies expect to close the deal in the fourth quarter, pending regulatory approvals.