Ambitious Stobart announces flurry of takeover deals
Haulage giant the Stobart Group announced a flurry of deals today including acquiring Cheshire-based rival James Irlam & Sons and absorbing partner companies Carlisle Airport and WA Developments into the group.
The deals are Stobart's first since listing on the stock market in September 2007 through the £138m merger with Westbury.
Stobart is paying £59.9m for Irlam, based in Chelford, Cheshire. Three sons of founder James Irlam – David, Michael and Stewart – will share £36.2m in cash and David will become a director of Stobart if the deal is approved at EGM and by regulators. A further £10m will be paid in new ordinary shares and £13.7m in loan notes.
James Irlam created the business in 1964 transporting milk churns to Manchester dairies and returning with supplies for local farms.
Irlam currently operates 263 trucks, 633 trailers and employs 674 staff. The Irlam fleet will retain its brand identity and continue to be managed from its existing headquarters. There will be no redundancies.
Stobart aims to use the additional capacity to increase efficiency from 84% of trucks in use at any one time to 90%.
Irlam owns 600,000 sq ft of warehousing space in Stoke and Chelford sites from where it principally operates. Customers include Proctor & Gamble, Danone Waters and Pedigree
David Irlam, chief executive of Irlam Group, commented: "Irlams and Eddie Stobart have worked together for a number of years and understands the potential benefits of an expanded group to its customers and employees. We are looking forward to becoming part of the Stobart Group and bringing together two established brands, strong management and proven success."
In addition, Stobart proposes the acquisition of Andrew Tinkler's WA Developments, a transport infrastructure engineering specialist which has been advising Stobart on the redevelopment of the inland port operations in Widnes and Runcorn. Tinkler, who is also chief executive of Stobart and has been instrumental in its growth in recent years, will receive £10m in cash from the sale subject to performance in the year to the end of May 2008. WAD will handle Stobart's growing civil engineering contract book at its multi-modal freight centres as well as third party work.
Stobart has also entered into an option to acquire Carlisle Airport and 460 acres under its control for £15m in cash and shares.
The deal is subject to planning consent being granted for a new 620,000 sq ft logistics centre to consolidate Stobart's facilities in the region.
The option lasts until 4 July and includes a £50,000 feasibility study to be undertaken into the expansion of the airport to handle freight and improved passenger services. The £15m valuation would be broken down to £2.5m cash and the rest in shares. Carlisle Airport is owned by Tinkler and William Stobart through WAD Holdings.
Rodney Baker-Bates, chairman of Stobart Group, commented: "These proposals represent another step towards establishing Stobart as the UK's leading multimodal transport and logistics provider. James Irlam & Sons is a company with a strong track record for solid delivery and first class customer service with an operating ethos very similar to that of Eddie Stobart.
"The acquisition of WA Developments and the option to purchase Carlisle Airport will enhance the development of our existing operations and provide additional growth opportunities."
Following the deals, Stobart will have net assets of over £320m, operate more than 1,300 trucks, 2,300 trailers and employ over 3,500 people across the UK. The group will have an established portfolio of long-term, big-brand customers, including Tesco, Coca-Cola, Proctor & Gamble and Johnson & Johnson.
The Manchester offices of Grant Thornton and DLA advised James Irlam. Halliwells in Manchester and London-based Cenkos Securities advised Stobart.
Stobart's share price was down 1p at 134p.
