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The head of Wincanton, the UK’s last large warehousing group, is defiant that his company retain its London listing and avoid the same fate as rival Clipper Logistics, which is being taken over by US-based GXO.
James Wroath, chief executive of Wincanton, which runs the British supply chains of retailers J Sainsbury and Primark, and brewer Heineken, said that he wanted to expand the company as a publicly traded entity in the UK amid a flurry of buyouts in the logistics sector.
“My intention is not for Wincanton to get bought,” he told the Financial Times. “It’s really important that the UK has a British-owned logistics company of size and scale.”
The huge growth in ecommerce sales for retailers and the maelstrom of supply chain problems, including lorry driver shortages caused by the pandemic, has raised the profile of the logistics sector, helping to drive acquisition activity.
Last week, Clipper received a near £1bn formal takeover bid from GXO, which was spun out of a large US trucking company last year, valuing the Leeds-based group at 13.6 times its forecasted 2022 earnings before interest and tax factoring in cost cuts.
By contrast, Wincanton, which generated £1.2bn of revenues in its previous financial year, trades at 6.2 times of 2022 forecasted ebit.
“There is always a possibility [of a takeover bid] with the rating so undervaluing the company,” said Gerald Khoo, an analyst at Liberum.
While Wroath cannot rule out the acceptance of a takeover offer for Wincanton given that the board would decide on the basis of maximising value for its shareholders, he sees its near-term future as better suited to the London market.
The UK and Ireland logistics sector had a record year for dealmaking in 2021 with 66 transactions completed for a disclosed value of £2.7bn, according to BDO, an accountancy and M&A advisory which began tracking activity in 2016.
Jason Whitworth, a partner at BDO, said that the strong balance sheets of international logistics companies meant that they were on the hunt for acquisitions to build “pan-European” operations as the pandemic boom in online shopping cools off.
The need to invest in automation and the restricted availability of industrial properties are also driving takeover activity.
The number of big names in the UK logistics outsourcing market has been whittled down over the years and the takeover of Clipper will reduce it further to three main players: GXO, DHL Supply Chain and Wincanton.
Clipper generated most of its £696mn annual revenues from retail customers including handling their online returns. While Wincanton is expanding operations in this area, it is more diversified, such as providing the logistics for the construction of EDF’s Hinkley Point nuclear power plant and fuel distribution.
But analysts said that British retailers would bristle at a reduction of the market to two big companies and outsourcing their supply chain operations to a provider that also services their rivals.
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