Stobart reverses into Westbury in £138m deal
Published 16/08/2007 | 07:53
Eddie Stobart, the road haulage firm with a nationwide fan base, signalled its arrival on the stock market yesterday with a merger deal that will see it reverse into the Westbury Property Fund.
The new company, trading as the Stobart Group, will operate as a transport and logistics business, with a fleet of more than 800 trucks, as well as rail and water freight units.
The deal is in effect an asset swap, with Westbury paying £138m for Eddie Stobart, while the haulage company's principal shareholders, Andrew Tinkler and William Stobart, son of founder Eddie, simultaneously buy much of the property company's real estate portfolio for a privately owned independent business.
Mr Tinkler, who will serve as the company's chief executive, promised to retain the distinctive branding that Stobart followers are so keen to spot. But he said: "Our customers are increasingly looking for integrated road, rail and water transport that features as small a carbon footprint as possible, as well as low costs."
Westbury will retain a large warehouse it owns at Weston Port in Runcorn, an increasingly important arrival point for goods coming into the north-west of England, and announced yesterday that it was paying £23m for a rail-connected freight-handling business situated nearby.
Eddie Stobart also operates rail freight services, primarily on a contract for Tesco, and the new company plans a regeneration of Weston Port that will improve links to the Manchester Ship Canal. A new container handling facility should enable Stobart to handle 1 million tonnes of freight through the unit.
Yesterday's merger is the latest in a series of consolidation deals in the logistics sector. Three years ago, Deutsche Post paid £3.7bn for Exel Logistics, while Hays sold its logistics unit to the Swiss giant Kuehne & Nagel. More recently, TNT has been sold to private equity interests that have combined it with similar operations.
"What we are seeing is an increasing desire for scale in the logistics business," said Coolin Desai, a partner at PriceWaterhouseCoopers, which advised Stobart on the deal. "There is a great deal more potential in operating as a multi- modal haulage business."
The increasing cost of road transport has raised prices for businesses that move freight in this way, with companies also coming under increasing pressure to reduce their carbon dioxide emissions. Both trends have encouraged larger companies to shift more goods by rail, Mr Desai said, with Britain's extensive network of canals and inland waterways also enjoying a renaissance.
Mr Tinkler and Mr Stobart will retain a 28.5 per cent stake in the new business, with the latter joining his business partner on the board as chief operating officer. Mr Tinkler said: "We went through a rebranding exercise two years ago and our fans have no reason to be worried - now they'll have the chance to spot the odd Stobart boat, or even to buy shares in the company."
For Westbury, the deal represents the final transformation of a company founded five years ago as a closed-end investment fund specialising in commercial property. The company has increasingly focused on ports and rail-related property over the past 18 months and Stobart will retain only those real estate assets relevant to its logistics strategy.
Richard Burrell, Westbury's investment manager, will initially serve as a part-time executive director of Stobart, before taking a non-executive directorship after a transitional period.
Stobart's customers include Tesco, as well as other food and drinks companies such as Coca-Cola. Non-food clients include Johnson & Johnson and Crown.
Haulage firm with massive fan club
Eddie Stobart may be going corporate, but its lorries will retain the bright green livery and nameplates that a fan club comprising thousands so adore.
Since Edward Stobart founded his eponymous road haulage company in Carlisle in 1970, each lorry in its fleet has been christened with a female name (beginning with Twiggy, Tammy, Dolly and Suzi).
Eddie sold the business, still based in Cumbria, to his son William five years ago, after financial problems related to the fuel crisis that threatened the Government in 2000. William Stobart and his business partner, Andrew Tinkler, will serve as chief operating officer and chief executive respectively in the new company.
The appeal of Eddie Stobart is largely based on its homespun philosophies. The company's founder once insisted, on pain of disciplinary action, that his drivers wore a tie on duty. Drivers are still required to wave back and sound their horns when acknowledged by "Eddie spotters".
The company has even been immortalised in music, with The Wurzels recording "I wanna be an Eddie Stobart driver" (a remix of "I've got a brand new combine harvester") in 1995.
Yesterday's deal also guarantees a future for parents' attempts to distract their children on long journeys. Kids will still be able to keep a tally of Stobart green lorries spotted against the rival red trucks of the French firm Norbert Dentressangle, once tipped as a bidder for the company.