LONDON (Thomson Financial) - Eddie Stobart, the iconic UK haulage company,
is heading for a listing in London after it reversed itself into property
company Westbury Property Fund Ltd in a 138 mln stg deal.
Stobart, which has a fleet of about 950 trucks, 28 depots and turnover of
just under 170 mln stg, said the merger would increase its intermodal rail and
shipping offer to customers.
"To me, it was all about the fit between the two businesses and being able
to give our customers additional services, which benefit them and the
environment," Eddie Stobart chairman Andrew Tinkler told reporters on a
conference call this morning.
"We are looking forward to getting a real intermodal system in place to
deliver a better service to our customers."
The new company will be called Stobart Group Ltd, and will be headed by
Tinkler and William Stobart as CEO and COO respectively.
Westbury signalled its ambitions to exit the commercial property market and
diversify into ports and industrial transport, which it said would offer better
future returns, last August.
"Westbury has had an extraordinarily good track record in commercial
property over the last three years, producing returns of some 25 pct per annum
for shareholders," Richard Burrell, investment manager of Westbury, told
reporters. "However, that is clearly not going to continue going forward and the
board of Westbury had taken the view that businesses such as integrated
transportation and logistics are now a much better option than commercial
property going forward."
Westbury owns Weston Point Docks in Runcorn, AHC Warehousing Ltd and the
rail operations of VWR, and today it added the Widnes-based rail-connected
freight handling business O'Connor for 23 mln stg.
Stobart also moved into rail freight operations last year with the launch of
a dedicated service for retailer Tesco between Daventry in the Midlands and
Livingston in Scotland.
The merger gives "significant scope" to further increase rail freight
services for both existing and new customers, Tinkler said.
The combined group plans to develop logistics parks in Widnes and Runcorn in
the North West, with warehousing facilities and road, rail and water
connections.
Customers are increasingly recognising the commercial and environmental
benefits of combining road haulage and storage with rail freight and waterborne
transport systems, the companies said.
"The balance sheet of the enlarged group will enable us to work with our
customer base to provide storage and facilities handling businesses in key
locations where we can link rail and waterborne transport together," Burrell
said.
The new company will have equity of over 250 mln and will have an
established portfolio of long-term customers, including Tesco, Coca-Cola,
Johnson & Johnson and Sarah Lee.
Tinkler said the group would work with its customers in developing
intermodal services.
"We're looking at ways of sharing the risk with our customers and where
savings can be made by reducing empty miles and standing vehicles," he said. "We
are already talking to customers to bring on facilities as soon as possible."
The group's fleet of green trucks, however, will remain a familiar sight on
Britain's motorway network, much to the relief of the company's dedicated
followers, who have their own fan club and are able to buy Eddie Stobart
merchandise.
The company was founded by the eponymous Eddie Stobart in 1970 in Cumbria,
and by 2001 it had grown to 900 vehicles and 27 depots.
It ran into trouble in 2004, caused by the high price of fuel, and it was
sold to Stobart's brother, William Stobart, and business partner Andrew Tinkler,
who owned a railway maintenance company called WA Developments.
Under the terms of the reverse takeover, the majority of Westbury's property
portfolio, comprising 19 properties and valued at 139.4 mln stg, will be bought
by Stobart's owners for 142 mln stg through their separate property company,
WADI Properties.
Westbury's purchase of Stobart, meanwhile, comprises 62 mln in cash and 76
mln in new shares.
Westbury also reported a much lower first-half pretax profit at 110,971 stg,
compared with 17.5 mln stg in the year-earlier period.
The completion of the disposal and merger is expected to take place on or
around Sept 20.
r.jones@thomson.com; paul.sandle@thomson.com
ps/ms1
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