Eddie Stobart has found the investment it has long been seeking by merging with property company Westbury Property Fund Ltd, and so entering the London stock market.
The move sees Westbury buy Eddie Stobart from WA Developments for £138m, which it will recoup instantly by selling £142m of property assets to WAD.
Westbury Property Group and Eddie Stobart Ltd will together form Stobart Group Limited, the shares of which will start trading on 20 September. Technically the Westbury shareholders will vote on the merger on the 19 August but no opposition is expected.
Andrew Tinkler, chairman, and William Stobart, managing director of Eddie Stobart, will become chief executive and chief operating officer of the Stobart Group respectively with a 28% stake. The new company will therefore retain the current Stobart management with the addition of the Westbury board.
Eddie Stobart’s turnover posted on 28 February 2007 was £168m with profits before exceptions of £14.1m; Westbury’s pre-adjusted profits for the six months to 30 June 2007 were £11.8m. The company says that it expects analysts to anticipate a £250m revenue for the combined group’s first year.
While the much vaunted Carlisle airport remains WAD property, Westbury owns a Runcorn port site and a rail terminal in Widnes which the company says will help develop Stobart’s intermodal business.
William Stobart says: “A key part of the future strategy will be to invest in the new port at Runcorn and… Widnes to create an intermodal port facility with road, rail and deep sea inland waterway access capable of handling significant cargo volumes linked to a haulage network."
Thomas Cullen, chief analyst at Transport Intelligence, says that the deal marks a significant transition for the company from a pure transport provider to one that’s more concerned with warehouse and infrastructure management. He adds: “The new firm seems to be much more focussed on running depots and warehouses than trucks; it’s a big shift in emphasis. However Westbury enables it to make that shift and allows it access to the sort of capital required for new infrastructure projects.”
Cullen says that recent speculation had linked Stobart with both Swiss firm Kuehne + Nagel and German railway operator Deutsche Bahn which recently bought rail freight operator EWS. Both companies have been actively building multi-modal networks and the acquisition and Stobart would have fitted well with those operations, Cullen adds.
However, he said that the firm’s centre of gravity in the North-west seemed out of place with a genuine ambition to enter a multi-modal container market centred on the South-east ports. He adds: “What you would really need to do is to develop facilities round the big container ports, perhaps this is the ambition and this is why they need so much more money.”
Buried in the release from Westbury is also the news that it has acquired Widnes-based container logistics and storage firm O’Connor Group for £24m.
The company also added: "Eddie Stobart has a large and loyal fan base. There are thousands of fans who collect memorabilia and attend events and a large number who compete in the ‘Spotters League Table’. For many, the metamorphosis of Eddie Stobart to a publicly listed company will mean that they can now invest and own a part of the company."
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