Fortna, MHS Merge

MHS Global, a provider of material handling automation technology and systems integration, and Fortna, a software and solutions provider for warehouse and distribution, will combine to form a multi-billion-dollar, multinational company providing parcel, warehouse and distribution, and lifecycle services.

MHS and Fortna belong to the investment portfolio of Thomas H. Lee Partners, L.P. (THL), a premier private equity firm investing in middle market growth companies. THL will remain the majority owner of the combined company and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) will acquire a significant minority stake to support the combination.

As businesses increasingly require improved throughput and faster execution, there is heightened demand for automation, advanced operating software and services. The combination of MHS’s automation technologies and Fortna’s operational optimisation software, in addition to each company’s deep industry partnerships, serves the need for end-to-end solutions in logistics operations.

Customers will benefit from the breadth and depth of both companies’ offerings: industry-leading capabilities in parcel, cross-docking, conveyance, and sortation solutions combined with industry-leading orchestration and optimisation software and unique operational designs leveraging advanced automation to drive greater efficiencies and cost savings for customers.

MHS and Fortna belong to the investment portfolio of Thomas H. Lee Partners, L.P. (THL), a premier private equity firm investing in middle market growth companies.

“MHS has built its reputation over the past 20-plus years by being a reliable and committed partner while expanding our capabilities and taking a progressive, tech-forward stance to deliver new products and solutions,” said MHS CEO Scott McReynolds. “Combining with Fortna will allow us to accelerate our collective efforts on all fronts, to the benefit of our customers, employees, and suppliers.”

“Fortna has been a trusted advisor driving competitive advantage for our clients as they build direct-to-consumer models, increase service levels, and enable a lower cost to serve,” said Rob McKeel, CEO of Fortna. “The combination with MHS will enable the model to scale with our clients globally and allow the combined company to drive further innovation in operating models, software, and automation.”

Upon closing, McKeel will become the CEO, and McReynolds will become the President, of the combined entity.

Hamad Shahwan Al Dhaheri, Executive Director of the Private Equities Department at ADIA, said, “MHS and Fortna are leading players in their respective industries, and their combination will create a significant operating platform for the company to deliver automation solutions to customers on a global scale. This transaction aligns with our approach of making investments alongside proven partners in support of technology leadership.”

Jim Carlisle, Managing Director at THL and head of both Technology & Business Solutions and the THL Automation Fund, said, “We look forward to working with the talented management teams and employees of Fortna and MHS as we continue to drive excellence in logistics automation. Automation solves industry-wide challenges, such as labour shortages, and helps customers meet escalating demand. These two companies are well positioned to meet these challenges and unlock new opportunities for their customers.”

Carlisle will serve as board chairman of the combined company.

This transaction is subject to customary closing conditions and regulatory approvals. Terms of the transaction were not disclosed.

Morgan Stanley & Co. LLC and RBC Capital Markets, LLC served as financial advisors to MHS. Baird served as financial advisor to Fortna. Kirkland and Ellis served as legal advisor, respectively, to both companies. J.P. Morgan Securities, LLC will lead the debt financing for MHS.

J.P. Morgan Securities, LLC and Gibson, Dunn & Crutcher LLP served as financial and legal advisors, respectively, to ADIA’s subsidiary.