Acquisition of Benfleet Forwarding Ltd
(“Xpediator” or the “Group”)
Acquisition of Benfleet Forwarding Ltd
Xpediator, (AIM: XPD) a leading provider of freight management services across the UK and Europe, is pleased to announce it has acquired the UK-based international freight forwarder, Benfleet Forwarding Ltd (“Benfleet”) (the “Acquisition”). The initial consideration payable on completion is £6.55m comprising £3.95m in cash and £2.6m in new Xpediator ordinary shares. Further consideration of up to £3.9m in cash may also be payable contingent on the future results of Benfleet.
- Benfleet is a complementary acquisition with immediate cross-selling opportunities and potential cost synergies.
- Benfleet generated revenue of £21.0m, operating profit of £1.73m and profit after tax of £1.35m during the year ended 31 March 2017 (“FY17”). Net assets at 31 March 2017 were £1.35m and cash in the balance sheet at completion was approximately £2.47m.
- The cash consideration will be funded from existing resources.
- Benfleet operates across Europe, with offices in Dover, Basildon and Chelmsford in the UK, Trento in Italy and Ploiesti in Romania.
- Benfleet is an asset-light operation providing freight forwarding services including road transport solutions and sea freight services.
- On completion, the enlarged Group will operate from 5 sites in the UK together with 11 offices in Europe and employ over 650 people.
- The acquisition is expected to be immediately earnings enhancing.
As stated at the time of the Company’s IPO in August this year, a key reason for Xpediator listing on AIM was to facilitate the Company’s M&A strategy in the highly fragmented freight forwarding and logistics market. Benfleet was identified as an acquisition opportunity prior to the Company’s IPO given the natural fit between the two businesses offering attractive synergies and cross-selling opportunities.
Benfleet, headquartered in Basildon, England, is an international freight forwarding and courier company established in 1987, specialising in flooring, machinery, household goods and hanging garment transport solutions. Benfleet’s highly experienced freight management services team operates an asset-light operation that includes road transport solutions and sea freight services. Coordinated through offices in Dover and Felixstowe, with freight forwarding services extending across Southern Europe to Italy, Greece, Portugal and Turkey, as well as the Far East and China. In 2015, Benfleet secured a significant Chinese customer with which it entered into a six-year contract and which Xpediator believes could result in further cross-selling opportunities.
Stephen Blyth, Xpediator CEO, commented, “We know the Benfleet business well and we are confident it will be a commercially valuable and accretive acquisition for us. Benfleet shares our asset light approach to freight forwarding and will add significantly to our sea freight services.
“The Benfleet team are well known and highly experienced within the freight forwarding sector and we are delighted that Jason Herring, Benfleet’s Managing Director, will continue to run the business.
“Our client bases are similar but do not have significant overlap and while our freight management services our comparable our geographic focuses are different. There are therefore immediate opportunities to provide greater geographic coverage to both client bases and we have identified duplicated costs.
“Our strategy is to grow not only organically but also by acquiring smaller competing businesses which can enhance the Group’s earnings and enhance our freight management services to existing and new clients. This acquisition meets these criteria and we look forward to integrating Benfleet alongside our Delamode freight forwarding services.”
Potential Acquisition Benefits
- Offers an established presence in countries outside Xpediator’s core European regions, in Italy, Greece, Turkey and Portugal.
- Port offices in Dover and Felixstowe are well placed to facilitate future customs clearance activity in the event of a hard border post Brexit.
- Leverage further opportunities around Benfleet’s six-year contract signed with a significant Chinese customer.
- Similar freight forwarding services offered across different geographies provides the opportunity for cost-synergies through increased group buying such as haulier procurement.
- Benfleet’s current sea freight services will strengthen the Group’s existing service offerings.
- Minimum integration costs, the business will continue to operate under the Benfleet brand.
- Benfleet will continue to be led by Jason and will retain a high degree of autonomy whilst benefiting from the synergies of being part of a larger group.
- The amount of deferred consideration is wholly dependent on Benfleet’s profits for the two years ending 31st March 2019. Current trading is slightly ahead of the previous year.
The Acquisition consideration comprises:
- an initial payment to the shareholders of Benfleet of £6.55m comprising £3.95m payable in cash on completion together with the issue of 9,219,858 Xpediator ordinary shares of 5 pence each, issued at a price of 28.2 pence per share being the average closing market price of an Xpediator ordinary share for the five days preceding completion of the Acquisition; plus
- a further payment of £1.3m in cash is to be made on 31 May 2018 May subject to an agreed level of operating profit being achieved by Benfleet for the year ending 31 March 2018; plus
- a further payment up to a maximum of £2.6m payable in cash and subject to the average operating profit generated by Benfleet for the two years ending 31 March 2019.
- The maximum acquisition payable by Xpediator is £10.45m comprising a maximum cash payment of £7.85m and the issue of Xpediator ordinary shares with a value of £2.6m. On completion, Benfleet had cash in its balance sheet of approximately £2.47m.
Admission of New Ordinary Shares
Application has been made to the London Stock Exchange for the admission of 9,219,858 new Xpediator ordinary shares of 5 pence each (“Ordinary Shares”) to trading on AIM. Admission of the new Ordinary Shares is expected to take place at 8.00am on 1 November 2017. Xpediator’s total issued share capital following admission will consist of 110,053,191 Ordinary Shares of 5 pence each with one voting right per share. The above figure of 110,053,191 may be used by shareholders as the denominator for the calculations by which they can determine if they are required to notify their interest in, or a change to their interest in, the Company following admission.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
Tel: +44 (0)330 043 2395
Stephen Blyth, Chief Executive Officer
Richard Myson, Chief Financial Officer
SP Angel Corporate Finance LLP (Nominated Advisor & Joint Broker) Tel: +44 (0)20 3470 0470
Richard Parlons, Elizabeth Johnson (Sales)
Cantor Fitzgerald Europe (Joint Broker) Tel: +44 (0)20 7894 7000
David Foreman, Callum Butterfield (Corporate Finance)
Alex Pollen, Caspar Shand Kydd (Sales)
Novella Communications (Financial Public Relations) Tel: +44 (0)20 3151 7008
Xpediator is a leading provider of international freight forwarding and courier services. Established in 1988 by CEO Stephen Blyth today the Company’s international network of offices provides regular and direct transport solutions linking Eastern Europe, the Balkans and the Baltics with Western Europe, together with logistics and warehousing in the UK and Romania. The business offers integrated freight management within the supply chain logistics and fulfilment sector, through their three main areas: freight forwarding, logistics and warehousing and transport solution services. With headquarters in Braintree, Essex and offices in eight CEE countries across 22 sites, the Group currently employs over 600 people and was successfully listed on London’s AIM market in August 2017.
For more information, please visit: www.xpediator.com