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Stobart takes a new role
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The creation of the Stobart Group has positioned the company to become a major player in multi-modal distribution — look out for it coming to a port near you. Louise Cole reports.
The news that Eddie Stobart has been sold to Westbury Property Fund to form the Stobart Group (SGL) has finally ended speculation as to whether the nation's best known road haulage operation would go abroad to seek investment.
The deal involves Stobart being sold in a 'reverse takeover' for I:138m, while its parent company WA Development buys £142m of property assets from purchaser Westbury.This has two major advantages for Stobart.
The first is its debut into the London Stock Exchange; the most immediate source of ready capital. Westbury shares, which are suspended until the new company starts trading on 20 September, closed at 152p. It will be interesting to see the value the market puts on SGL shares when they re-emerge, but analysts are likely to upgrade the company's value significantly,with its asset and revenue bases virtually doubling to an expected £250m.
The other major advantage is the intermodal infrastructure the deal brings. WA Developments, with its rail roots, has been investing heavily in multi-modal transport. most notably by buying Carlisle airport. The airport will remain the property of WA Developments, but Stobart's HQ is still expected to move there, and William Stobart and Andrewlinkler (both named as bosses of the new Stobart group) have said they will remain based in Cumbria.
But Westbury, better known to the stock market as a general property investment firm, has been concentrating on logistics and transport sites since 2006.
This was a canny move. Quite apart from the money to be made from working the capital, demand for land is expected to massively outstrip supply within the next five years (Logistics industry must share land; CM 19 July).
Triple access to port
In March 2006 it bought the Port of Weston in Runcorn, a 50-acre site with road,deep-sea and inland water access: then it snapped up AHC in Widnes, a rail-terminal and storage business on a 103-acre site. In January 2007 Westbury revealed that it would like to dispose of its general property assets and concentrate on asset-backed business It was at this point Tinkler. then chairman of Stobart,became aware of the company when his bank played match-maker. Previously Stobart's well-publicised hunt for capital investment had linked its name with Norbert Dentressangle, Deutsche Bahn and Keuhne & Nagel. Tinkler says: "Westbury was a great fit to get investment into the business. We were introduced to it through our bank, which said this company wanted to sell its property portfolio and concentrate on asset-backed business With the rail and port facilities it already owned, it fits what we want to do, which is to develop more on the rail and the waterways" On the day that Westbury and Eddie Stobart merged the new Stobart Group bought Widnesbased O'Connors, funded with £23m from the Royal Bank of Scotland. O'Connors is a rail handling business right next door to AHC: the deal included 39 acres of land and six rail sidings with room for storage and handling.
Tinkler says: "We are going to develop one million square feet of warehousing there as our next step.
O'Connors has a special relationship with shipping firm Maersk; according to Tinkler it offers "very fast turnaround". He says they will take freight from feeder ships and offer storage on site and multi-modal distribution.
Stobart Group is proposing a five-year regeneration programme for the Port of Weston. This will include warehousing, with bonded and palletised storage; new container handling facilities fronting the Manchester Ship Canal capable of handling a million tonnes of freight a year; an extension to the West Coast mainline rail siding into a new warehouse:a new link road between the local access road and the motorway; a bulk liquid tank farm and packing facility; and improved shipping access between the dock and the Manchester Ship Canal.
Shipping is new to Stobart's management and the Westbury board features only two members with experience in logistics Guy Middleton. who runs the port and rail business at subsidiary Westlink, and Mark Forrest, who was previously operations director for the container terminal at PD Ports.
Tinkler is confident that the new terrain will be a challenge. but not an obstacle: "We're still running it. It's all about the logistics and the detail and we've got a fantastic customer base to work with. Shipping allows us to take more control of the whole system and that way you can cut more waste out of the supply chain.
"I believe this will open up new contracts for us because we can give a better service with lower costs and even a better carbon footprint for our customers," he adds.
And this isj ust the beginning. Runcorn is a test site a seed for future development. -We're excited about this, the board, William and he says."We're all really excited.The plan is to build a model in the North-West that works well and then we will take that around the UK.We will be looking for other acquisitions that fit this model based around road,rail and sea. •