Eddie Stobart has announced that it has entered into an agreement to acquire the entire issued share capital of The Pallet Network Group Limited (“TPN”), a leading provider of pallet distribution services across UK and Ireland, for total consideration of £52.8 million. Completion of the Acquisition is expected to occur on or around 29 June 2018 following admission of the Placing Shares.
Eddie Stobart also announces a placing with institutional investors to raise £30 million before expenses (the “Placing”) through the issue of 21,428,572 Placing shares of 1 pence each in the capital of the Company (“Placing Shares”) for 140 pence (“Placing Price”) per Placing Share. The Placing was well supported by new and existing institutional investors.
Of the total consideration of £52.8 million, £44.14 million is payable in cash upon completion and the remaining £8.66 million will be payable to certain of the Sellers over a period of two years following completion. The Acquisition will be funded in part by the net proceeds of the Placing and in part through the extension of the Eddie Stobart group’s (“Eddie Stobart Logistics”) existing debt facilities with its current syndicate of lending banks.
Alex Laffey, Chief Executive Officer of Eddie Stobart, commented:
“We are delighted that TPN will be joining Eddie Stobart Logistics. TPN is a leading player in pallet distribution across the UK and we are confident that this transaction will significantly enhance our capabilities in a space in which we do not currently operate and consequently offers cross-selling opportunities to serve our clients’ growing needs.
“I would like to welcome Mark Duggan, Managing Director, the management team and the TPN network members to Eddie Stobart Logistics and look forward to working closely with them all. This acquisition is in line with our strategy and the Board is confident that TPN will strengthen our position as a leading provider of end-to-end supply chain solutions.”
Background to and strategic rationale for the Acquisition
The acquisition of TPN significantly enhances Eddie Stobart Logistics’ existing skills and capabilities, including meeting customers’ needs for next day, less than truck load deliveries, positioning Eddie Stobart Logistics in an attractive segment which has grown at a significantly greater rate than the wider logistics market over the last three years. The Directors believe that this combination will provide benefits to both businesses and to TPN network members, through cross-selling to existing Eddie Stobart UK customers and collaboratively deploying our enhanced operating model into Europe.
The TPN management team, led by Mark Duggan, will continue to run the TPN business following completion. The Acquisition is expected to be earnings and cash enhancing in Eddie Stobart Logistics’ 2018 financial year.
TPN is one of the UK’s leading palletised freight distribution networks offering premium, economy and tail-lift services throughout the UK and Ireland.
Founded in 2000 and headquartered in Minworth, TPN operates the UK’s second largest pallet network, comprising 106 regional hauliers (“members”). TPN’s hub-and-spoke model provides distribution services from three central hubs in Minworth, Preston and Northampton to a total of 121 distribution sites.
Employing over 230 staff, TPN processed approximately 3.9 million pallets in the twelve months to 31 March 2018, with daily capacity for up to circa 21,000 pallets for customers across a broad range of sectors. TPN has a loyal membership base, with the majority of members having formed part of TPN’s network for more than ten years.