Stobart’s transport and distribution business is to be floated off as a private company, named Eddie Stobart Logistics, in which the group will retain a 49 per stake.
The controlling 51 per cent stake in Eddie Stobart Logistics will be taken by funds managed by DBAY, the asset management firm based in the Isle of Man. Members of the DBAY team participated in the acquisition of TDG in 2008 and its subsequent sale to Norbert Dentressangle.
Eddie Stobart Logistics, which will be led by William Stobart, generated EBIT of £25.6 million on revenue of £475.7 million in the year ended 28 February 2013. The deal values the business at £280.8m.
William Stobart will leave the Stobart group board to become CEO of Eddie Stobart Logistics.
Stobart Group said: “The plans we have established with DBAY, William Stobart and his management team should maximise value for shareholders through our 49 per cent stake over the coming four years.”
William Stobart said: “I really welcome this investment from DBAY and look forward to heading up the new partnership as CEO. DBAY have a strong track record of working with existing management teams within businesses, as they will do with us, to help drive growth.
“We already have an extremely loyal customer base who we look forward to continuing to work with. It is an exciting time for us to grow this business and I am looking forward to this next stage and the opportunities that it will bring for our employees and customers.”
Stobart Group’s ongoing business will be focused on its infrastructure and support services operations.
It will retain the Eddie Stobart brand (there will be a licensing agreement with ESL), the biomass transport operations and the majority of the freehold properties used by the Transport and Distribution division.
Andrew Tinkler, CEO of Stobart said: “This is a further stage in delivering our strategy of creating and realising value for our shareholders. Moving forward, we are focussed on capitalising on the opportunities in our Infrastructure and Support Services Divisions, enhanced by investment in Stobart Green Energy.”
It will use the cash from the disposal to repay a £100m loan from M&G, leaving it with minimal net debt. It will also fund a £35m share buyback and provide £55m funding for Stobart Green Energy.
Stobart Group reported total sales of £572.4m for the year to 28th February 2013 with an underlying operating profit of £44.9m.
* Douglas Bay bought TDG in in the summer of 2008 in a deal that valued the business at £203 million.
A key part of the strategy was to move the logistics operations to an “asset-light” business model, maximising the return from TDG’s extensive property portfolio.
In the half year results released in August 2010, Douglas Bay revealed £41m of property sales in the first half, and said it had paid off 80 per cent of the debt originally taken on to buy TDG.
It agreed to sell the remodelled business to Norbert Dentressangle for £196m in November 2010.