Pallet specialist bought by transport giant for £53m

The Pallet Network Group has been bought by transport giant Eddie Stobart Logistics for £52.8m.

Eddie Stobart, which demerged out of Stobart Group in 2014, has raised £30m in a share placing to help fund the cash deal. £8.66m of the agreed price will be paid in the two years following completion.

The deal provides an exit for LDC, which first backed an MBO in 2007 at the Sutton Coldfield business.

TPN employs 230 people operating the UK’s second largest pallet network of 106 regional hauliers. Its hub-and-spoke model provides distribution services from three central hubs in Sutton Coldfield, Preston and Northampton to a total of 121 distribution sites.

The existing management team, led by Mark Duggan, will continue to run the £110m-turnover business.

Eddie Stobart chief executive Alex Laffey said: “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.”

Stobart sees the acquisition as an opportunity to position the group in an attractive segment which has grown at a significantly greater rate than the wider logistics market over the past three years.

It said it believes this combination will provide benefits to both businesses, and to TPN network members, through cross-selling to existing Eddie Stobart UK customers and deploying the group’s enhanced operating model into Europe.

Deloitte was the lead advisor to Eddie Stobart Logistics and also provided financial and tax due diligence transaction support.

Darren Boocock, Deloitte’s head of corporate finance in the Midlands, said: “This deal significantly enhances the capabilities of one of the UK’s largest and well-known logistics businesses, and will support that business as it looks to diversify its services to meet the on-going demands of the market. TPN is a leading player in the UK pallet network market and is the perfect asset for the company’s future growth.”

Legal advice was provided to Eddie Stobart Logistics by Freeths. Cenkos Securities and Berenberg Bank acted as brokers on the transaction.

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