Xpediator raising £2.8m, buying Essex logistics firm

Freight management services provider Xpediator announced on Thursday that it intends to raise approximately £2.8m by way of a placing of new ordinary shares.

The AIM-traded firm said the placing shares would be issued at 40p per share, being a discount of approximately 3.6% to the closing share price on 29 November.

Its board said it has signed non-binding heads of agreement to acquire an established Essex-based freight forwarding and logistics business, with a cross deck terminal and revenues of £13m.

Xpediator said the business had a “global network of agents” and three UK offices, and offered cross-selling opportunities together with potential synergies from warehouse utilisation.

The consideration would be between £1.8m and £3m on an earn out formula, and structured similarly to the company's recent acquisitions.

“The board intends to raise approximately £2.8m, of which £0.75m would be used to fund the initial cash consideration for the acquisition,” it explained in its statement.

“In addition, £0.8m would be used to finance other potential acquisition opportunities should they arise.”

The board said it intended to allocate £0.2m to upgrade its IT systems, with the balance of £1.05m for working capital investment.

“The board perceives that economic growth continues to increase demand for transportation services, against static supply with an existing shortage of trucks across Europe.

“Accordingly, suppliers of trucking services for freight movement, which are utilised by the company in the provision of services to its customers, are increasing their preference for clients who can pay on time or early and to encourage this, are offering early payment discounts of up to 5%.”

The company estimated that up to £0.3m in cost of sales could be saved by taking advantage of those discounts, from a £0.5m investment, ignoring the potential benefits arising from improved relationships with suppliers.