Descartes Systems acquires Kontainers as digitisation booms

• Supply chain software developer, Descartes Systems Group (TSX:DSG) is acquiring Cracking Logistics, which operates under the name Kontainers
• Kontainers provides digital freight platform solutions, allowing logistics service providers to create branded digital experiences
• Descartes acquired Kontainers for approximately C$8.14 million cash up front, with another $8.14 million in potential performance-based earn-outs
• The company has noted that digitisation of services has significantly increased in the wake of the COVID-19 pandemic 
• Descartes Systems Group (DSG) is down 3.26 per cent and is currently trading at $48.96 per share

Supply chain software developer, Descartes Systems Group (TSX:DSG) is acquiring Cracking Logistics, which operates under the name Kontainers.

Kontainers is a provider of client-facing, digital freight execution platforms, for carriers, freight forwarders, and logistics service providers. The company facilitates digital experiences for customers in booking, tracking, and dashboard analytics.

Kontainers’ platform helps logistics service providers to create branded digital experiences for customers. Having a digital portal is increasingly becoming a necessity for companies, especially since COVID-19 broke out. 

Descartes acquired Kontainers for a total consideration of approximately C$16.28 million. The company paid an upfront cash consideration of approximately $8.14 million. 

However, Descartes may pay up to another $8.14 million in performance-based earn-outs. Kontainers can earn this by achieving revenue-based targets in the first two years after the acquisition.

Any additional earn-outs which Kontainers achieves will be paid by Descartes in fiscal 2022 and 2023. 

Descartes’ CEO, Edward J Ryan, said the world has changed in recent months, with digitisation accelerating as a result.

“Logistics services providers operate on tight margins. Those that don’t move quickly to digitise 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 digitisation brings, LSP’s 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 capitalise on this opportunity,” he said.

Descartes Systems Group (DSG) is down 3.26 per cent and trading at $48.96 per share at 1:00pm EDT.