It’s only logical
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At first glance, Stobart and Autologic may seem strange bedfellows, but look a little more closely and the acquisition begins to make more sense
Words: Christopher Walton
REMEMBER WHEN Stobart bought James Irlam? That was six years ago, believe it or not, and before the deal was done the rumour mill surrounding both parties was in overdrive. This year Stobart, never shy of publicity, produced a genuine shock in May when it put in a bid for car transporting giant Autologic.
They were strange bedfellows when the deal was first mooted: Stobart has never moved cars before, so adding Autologic to the green, red and white fleet is a step into the great unknown. Equally, Stobart has had a relatively quiet few years on the acquisition front since Irlam (apart from buying Innovate Logistics out of administration in 2008) went through six years ago. Not that it had ever stepped away from the market. Chief executive officer Andrew Tinkler told CM in early 2011 that Stobart had turned down the chance to buy TDG (which just a month before had been bought by great rival Norbert Dentressangle) because the £196m price was too high.
Tempting deal
But the far smaller price for taking Autologic off the Stock Exchange (£12.4m) proved far more tempting. Looking at it from various aspects, it is pretty simple really. It adds £144m a year worth of turnover to Eddie Stobart’s £519.5m, and that is a lot of stuff shifted for a lot of clients.
In January 2012, before the Sto bart bid was announced, Autologic signed a three-year contract with Volkswagen Audi, as well as a new contract with MG Motors for UK dealership distribution. And in the 12 months before that, a new contract had been signed with GM to handle some UK distribution. It extended the scope to include distribution of the Range Rover Evoque and renewed its contract with BMW for dealership delivery. It is an entirely different business to Eddie Stobart’s traditional clients.
As former Autologic chief executive and new deputy chief executive at Stobart Group Avril Palmer-Baunack said, because the Autologic business is so different to the main Eddie Stobart transport and distribution business, it can be run independently, without going through exercises such as merging networks from the outset.
“Autologic will continue to run as a standalone business within the transport and distribution division of Stobart Group and the day-today operations of Autologic will continue under the current management structure,” she said, adding that Autologic directors will continue to report to her.
Seamless transition
“The transition has been seamless as Autologic continues to run as a standalone division with all Autologic assets and personnel having been retained. A key aim of Stobart Group is to enhance Autologic’s offering to the automotive market, and delivering synergy with regard to buying power and reducing costs is also a key objective.” She and her counterpart at Stobart’s transport and distribution division, William Stobart, will continue to report to Tinkler. William Stobart rejoined the Stobart board of directors in September after stepping down in March 2011. Palmer-Baunack has also joined the board.
The acquisition also boosts Stobart’s presence in Europe, with Autologic’s Holland and Belgium business continuing as part of Autologic under Stobart Group ownership.
Not that Autologic has been shy about boosting its presence in the past couple of years. Its primary strategy has been to snap up the assets of its failed or failing rivals. In September 2010 it bought a large proportion of the business of insolvent rival Autocarriers, which traded as MCD, for £500,000. At the time MCD was third in the car transporting market (Cumbrian firm ECM is second) and Autologic said the deal put it “well ahead at the number-one position in the sector”.
Acquisitions
In February Autologic acquired Sensible Transport out of administration, adding another 30 car transporters and £6m of turnover a year to the balance sheet. Finally, in May, just days before Stobart made its bid, Autologic subsidiary Walon acquired what was described as certain assets of Spirit Motortransport.
The deals were enough to spark rumours about Autologic’s next target, until it too became a target.
Now the dust has settled, many will, no doubt, be looking to put the boot into Stobart’s latest line of business, but for Stobart, having Palmer-Baunack and the whole of Autologic in the fold will quickly become business as usual. ■