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Exel is set to buy Tibbett & Britten Exel's planned
Page 6
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acquisition of Tibbett & Britten will put it at the top
of the global logistics league. Guy Sheppard reports.
EXEL IS POISED to become the world's biggest contract logistics business with the takeover of Tibbett & Britten.
The £328m acquisition, which is backed by Tibbett & Britten's directors, is expected to go through by September.
Although about 200 headoffice jobs are expected to be lost, the main impact is likely to be improved performance abroad where both companies do about two-thirds of their business.
John Harvey, executive chairman of Tibbett & Britten, describes the combination with Exel as "an excellent strategic fit" which will create "the global leader in contract logistics". Exel says the deal will be partic
ularly beneficial for operations in Mexico, North America, Europe and the Asia-Pacific region as well as strengthening its presence in non-food retailing.
Exel's annual turnover will be boosted from £5bn to £6.7bn as a result of the takeover; the number of employees will rise from 74,000 to 110,000.
Spokesman John Dawson says the deal needs to be cleared by the competition office of the European Commission but adds: "We are bigger than any of our UK competitors but only a little bit bigger than Wincanton, our main rival. The addition of Tibbett & Britten produces about £600m more turnover in the UK."
Tom Mills, logistics analyst at business information company Datamonitor, warns the takeover poses some risks for Exel because of Tibbett & Britten's weaker financial performance.
"Although Exel forecasts annual cost savings of between £15-20m from combining the companies and eliminating duplicated functions, there is a perception among some observers that Exel is paying a high price for the business," he says.
Mills adds there is also the possibility of contract losses if existing customers respond unfavourably to the integration.
But John Evans, northern regional industrial organiser for the Transport & General Workers Union, feels this sort of problem is unlikely in the UK: "We don't see any company having a particular dislike to Exel and therefore deciding to pull the plug on Tibbett & Britten contracts."