Clipper Logistics (CLG) is poised to accept a takeover bid from its New York rival GXO Logistics (US:GXO), in a deal that would value the British company at almost £1bn.
GXO has offered a mix of cash and shares for the Leeds-based group, with an implied value of 920p per Clipper share. Clipper's board has agreed to the key terms and said – should a firm offer be made – it will recommend it unanimously to shareholders. This is subject to further due diligence and GXO securing debt financing for the deal, however.
GXO has offered to purchase Clipper shares for 690p in cash, and to issue new GXO stock worth up to 230p for each Clipper share. This represents a premium of 32 per cent on Clipper’s three-month average share price, and values the group at £943mn. Clipper's chief executive, CFO and executive chair have made irrevocable undertakings to back the deal, taking acceptances to almost a quarter already.
If the deal goes ahead, Clipper shareholders will have access to a ‘mix-and-match’ facility, where they can elect to vary the proportions in which they receive new GXO shares and cash.
The logistics sector is famously fragmented, and brokers at Peel Hunt say the Competition and Markets Authority is unlikely to be interested in the deal. They estimate that the combined group would have less than a 5 per cent share of the UK logistics market, behind market leader Culina Group.
The groups said that the deal represented a “highly attractive valuation” for Clipper shareholders, with “significant future potential upside”.
Shares in Clipper rose by almost 14 per cent in response to the news, to 884p. In its most recent profit announcement, covering the six months to 31 October, Clipper reported a punchy sales increase and a handful of significant new contracts with retailers such as JD Sports (JD) and John Lewis, and also signed a joint-venture agreement with luxury online fashion company Farfetch targeting US and Asian markets. Hold.
Last IC View: Hold, 702p, 9 Dec 2021
