Despite what looks like a denouement, the soap opera between Eddie Stobart Logistics and its potential suitors – Wincanton and DouglasBay Capital – could yet have major implications for UK supply chains…
In many ways it is a shame that Wincanton has backed out of a potential bid to acquire Eddie Stobart Logistics… an acquisition on this scale in UK third-party logistics hasn’t happened since… DHL bought UK Mail in 2016??? (Email me if I am wrong!)
The ongoing wrangling has been fun, with the bickering around Wincanton’s access to Stobart’s ‘books’ and Stobart’s preference to seemingly saddle itself with £55 million of debt, rather than subsume itself into Wincanton (let’s not forget that Stobart had a net debt of £155 million as of 31 May of this year). That Stobart said it was “disappointed” was almost heart-breaking in the love triangle between Eddie, Wincanton and DouglasBay Capital. Then again you’d be ‘disappointed’ if you’d opened up your books to a market rival and it came to nothing.
Perhaps Wincanton is safer to walk away. Those with long memories of the sector (like me) will remember the heady days when Wincanton expanded into continental Europe, which nearly broke the firm. Extra points for those that remember it was in 2011 to Rhenus and that a year later its share price bottomed out at around 39p per share. Of course, thanks to the stewardship of Eric Born and Adrian Colman it’s a very different business, and the share price has gone up some 548% in seven years.
Wincanton has been on an upwards trajectory since that sale, and perhaps the last thing new chief executive James Wroath needs is a time-consuming and messy acquisition to integrate in a firm that has traditionally been acquisition shy.
Where this leads Eddie Stobart is anyone’s guess. Before the shock announcement that it was actually making less money than everyone thought… and that Alex Laffey was leaving the business… the narrative was that it was a consolidator in the fragmented UK 3PL market.
Investors will start to question exactly how the addition of The Pallet Network; courier Speedy Freight and supply chain management business iForce is enhancing the core offering of 3PL road transport in the existing Stobart business. On their own, all three were strong businesses – as a total offering Stobart has to either persuade the market that the synergies are there, or that it is a conglomerate with strong divisions. If I were an investor I would ask if they were jewels that could be sold to reduce its debt position, for example.
Then again we still don’t know if its former MD Andrew Tinkler will be making an offer for the business either…. So while this all feels like a circus the truth is it has some very serious implications on the UK logistics market – Tesco has, after all, renewed its contract with Eddie Stobart until March 2021. This feels like a saga with a sting in its tail.