Logistics group Wincanton became the latest potential suitor for Eddie Stobart when it approached the Woodford-backed haulage group over a possible merger. Wincanton is undertaking due diligence over a possible tie-up with the troubled UK logistics and haulage group but is yet to make a bid or propose any possible terms, the two groups said in announcements to the stock exchange on Friday. “Operationally a tie-up could make sense,” analysts at HSBC said in a note to investors. “Combining the two businesses would offer greater scale and customer offering [and] unlock synergy opportunities”, while raising relatively few competition concerns. Wincanton, a rival and Britain’s largest logistics group, is Eddie Stobart’s third potential suitor in less than a month. Eddie Stobart said this week that discussions were continuing with private equity investor DBAY Advisors, which owns around 11 per cent of the company and is its fourth-largest shareholder, according to Bloomberg. Before the haulier’s stock market flotation, DBAY, which is based in the Isle of Man, owned 51 per cent of the group. Under Takeover Panel rules, DBAY has until 5pm on October 28 to announce a firm intention to make an offer or walk away. A third suitor, a company controlled by Eddie Stobart’s former chief executive Andrew Tinkler, this week abandoned interest in a buyout. Eddie Stobart, known for its distinctive green and red lorries, is reeling from an accountancy scandal this year that led the haulier to cut its profit from last year by about £2m and its chief executive to resign.
The group said in July that it was likely to lower adjusted earnings before tax and interest by about 4 per cent for the period to November 30, from the originally stated amount of £55.3m. That followed a review by Anoop Kang, who became chief financial officer in April. Dealing in the stock was frozen in August, and shares are still suspended at 71p, well below its 2017 flotation price of 160p. That may mean that opportunities arise to buy Eddie Stobart assets relatively cheaply, say the HSBC analysts. “It’s entirely appropriate that Wincanton kick the Eddie Stobart tyres,” the HSBC analysts said, even though it will probably tread cautiously. “Opportunities for transformative deals at potentially appealing prices don’t come around very often.” The underlying owner of the 20 per cent stake in Eddie Stobart is Woodford Investment Fund but, in a technical change due to the wind-up of the fund, voting rights have shifted to Link Fund Solutions. Link, the administrator of Neil Woodford’s troubled funds, has now been listed as the biggest shareholder in Eddie Stobart. Rothschild is advising Eddie Stobart, while UBS is doing so for Wincanton.
https://www.ft.com/content/5dd4660e-f172-11e9-ad1e-4367d8281195
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