Eddie Stobart to buy The Pallet Network for £52.8m

Alongside a half-year trading update, supply chain, transport and logistics group Eddie Stobart said on Thursday that it has agreed to buy pallet distribution services provider The Pallet Network (TPN) for £52.8m.

The company had announced earlier this month that it was in talks regarding the potential acquisition of a logistics service provider and said at the time that the consideration would be around £50m.

Of the consideration, £44.1m will be payable in cash upon completion while the rest will be paid over a two-year period.

Eddie Stobart also said it has successfully placed just over 21m shares at 140p with institutional investors, raising £30m to fund part of the acquisition. The rest will be funded through the extension of its existing debt facilities with its current syndicate of banks.

The company said the deal, which is expected to be earnings and cash enhancing this year, will help meet customers' needs for next day deliveries requiring less than a full truck.

Chief executive officer Alex Laffey said: "We are delighted that TPN will be joining Eddie Stobart Logistics. TPN is a leading player in pallet distribution across the UK and we are confident that this transaction will significantly enhance our capabilities in a space in which we do not currently operate and consequently offers cross-selling opportunities to serve our clients' growing needs."

Also on Thursday, the company said group revenues in the six months to the end of May were up 25% from the same period a year ago to £357.7m, reflecting strong organic growth from recent contract wins and the contribution from acquisitions iForce and Speedy Freight, which continue to trade in line with expectations.

Underlying earnings before interest, taxes, depreciation and amortisation and earnings before interest, taxes and amortisation were up versus 2017 and Eddie Stobart said its performance will be weighted towards the second half of the year, with the first half absorbing the costs of implementing new contract wins, the impact of the exceptionally poor weather and the reorganisation of its warehousing division.

"We continue to register strong levels of contract wins in all our sectors and during the first half of this year have won new contracts with an annualised value of circa £100m. We remain confident of delivering full year results in line with market expectations."

At 1510 BST, the shares were down 0.9% to 230.50p.