A logical deal that is EPS accretive
Xpediator has acquired Nidd Transport Ltd (“Nidd”), a freight forwarder and operator based in Ripon. With a strong network across the North of the UK plus France, Spain, Germany and Italy, Nidd fills many of the gaps in Xpediator’s European network. We expect substantial cross-selling benefits between the two customer bases. The trailing multiple paid appears very reasonable, considering the net cash and strong asset base of the acquired vehicle.In the year to April 2020, Nidd generated revenues of £11.0m, EBIT of £0.5m and PAT of £0.4m. The consideration amounted to £4.6m payable from the Group’s resources (net cash as of June 2020 was £4.3m). The price/sales multiple of 0.4x looks very reasonable, with the historic PER of 6.5x, net of Nidd’s £2m of cash. Moreover, a sizeable freehold property (Group tendency for leasehold), valued at £2.1m could further reduce the historic PER should a sale & leaseback occur.
We believe the acquisition represents a good opportunity to upsell Nidd’s customer base (and vice-versa) with an increased number of routes and services and, significantly, greater visibility in a post-Brexit world, particularly in terms of customs clearance. Management has also stated that Nidd will be EPS accretive from day one.
To us, this looks a very sensible acquisition. A share price modestly above the June ’20 NAV/share of 20p fails to recognise the progress management has made to date on both costs and enhancing growth prospects.
Kuehne & Nagel International is a holding company, engaged in providing logistics solutions. Co.'s business units comprised of: Seafreight, Airfreight, Overland, and Contract logistics. Co. operates on a worldwide basis in the following geographical areas: Europe, Americas, Asia-Pacific and Middle East, Central Asia and Africa. Within its Seafreight, Airfreight and Overland business units, Co. is engaged in purchasing transportation services from direct (asset-based) carriers and selling a combination of those services to its customers. Co. also develops solutions for the construction, renovation and operation of hotel chains and casinos all over the world.
Eddie Stobart is a logistics and supply chain organization in the UK. From its headquarters in Warrington, operating 2,200 vehicles, 3,800 trailers and 24 distribution centres throughout the UK and Europe. Co. operates its business across the following core sectors: E-Commerce - covering online retailers and omni-channel retailers; Manufacturing, Industrial & Bulk - includes movement of raw materials and components used in manufacturing processes; Consumer includes the movement of manufactured products; and Retail covers the retail supply chain, operating from either a retailer's supplier or a retailer's own distribution centers, from where goods are transported to a retailer's outlets.
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