Warrington logistics giant in £52.8m deal for Midlands pallet specialist

Transport group Eddie Stobart has acquired The Pallet Network Group (TPN) for £52.8m.

The Warrington-based group has also completed a share placing with new and existing institutional investors that raised £30m.

Sutton Coldfield-based TPN is a provider of pallet distribution services across the UK and Ireland.

The acquisition is expected to complete within the next day or two, following admission of the placing shares.

Stobart said £44.14m the total £52.8m acquisition cost is payable in cash, and the remaining £8.66m payable over two years following completion.

The purchase will be funded by the proceeds of the placing, and the extension of the group’s existing debt facilities.

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.”

He added: “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.”

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.

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.

Founded in 2000, TPN operates the UK’s second largest pallet network, comprising 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.

Employing more than 230 staff, TPN processed approximately 3.9 million pallets in the 12 months to March 31.

From December 15, 2015, to March 31, 2017, TPN recorded audited EBITA of £5.3m and profit before tax of £800,000 on revenues of £119.5m.

As at March 31, 2017, it had net assets of £400,000.

For the 12 months to November 30, 2017, TPN generated unaudited revenues of £108.9m and adjusted EBITA of £5.8m.

The Sellers of TPN are institutional investor LDC, Neil England and the TPN management team, being Mark Duggan, Paul Robinson and Mark Kendall.

Eddie Stobart Logistics also released a trading update today for the six months to May 31.

Group revenues for the period were £357.7m, a 25% increase on the comparable period for 2017.

This reflected strong organic growth from recent contract wins and the contribution from acquisitions (iForce and Speedy Freight) which continue to trade in line with expectations.

Both underlying EBITDA and EBITA have increased versus the comparable period in 2017.

The group said its performance, as in previous years, will be weighted towards the second half of the year, with the first half absorbing the costs of implementing new contract wins (which will flow through into second half), the impact of the exceptionally poor weather and the reorganisation of the warehousing division to accommodate increased demand from both iForce and Eddie Stobart customers.

Today’s statement said: “We continue to register strong levels of contract wins in all our sectors and during the first half of this year have won new contracts with an annualised value of circa £100m.

“We remain confident of delivering full year results in line with market expectations.”

Earlier this week Chester-based developer Liberty Properties submitted a planning application to Warrington Borough Council to build a state-of-the-art warehouse facility for Eddie Stobart Logistics in Warrington.

The £75m scheme could create 480 jobs, and support another 250 off-site roles.

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