GXO close to possible takeover of Clipper Logistics

GXO Logistics, which was spun off from XPO Logistics last year, has announced it has reached a agreement on the key terms of a cash and share offer for Clipper Logistics.

In a statement published yesterday, GXO said the board of Clipper had confirmed to GXO that, should a firm offer be made on the financial terms of the “Possible Offer”, it is minded to recommend it unanimously to Clipper shareholders, subject to the agreement of other customary terms and conditions.

GXO added that any declaration of a firm intention from the company to make an offer for Clipper remains subject to the satisfaction or waiver (by GXO) of a number of customary pre-conditions, including, inter alia, completion of confirmatory due diligence, agreement of the detailed terms of the Possible Offer and finalising the securing of debt financing.

The Possible Offer on the table is for GXO to acquire each Clipper ordinary share for a combination of cash and new GXO shares. Those shares are to be issued on the basis of the Exchange Ratio as defined in detail in GXO’S statement. However, in short, shareholders will receive 690p in cash, which amounts to £707m altogether. The shares in New York-listed GXO are worth £236m, which takes the total value of the deal to £943mn.

Clipper Logistics is an omni-channel retail logistics specialist with operations in the UK, Poland, Germany, the Republic of Ireland, the Netherlands and Belgium. For the year ended 30 April 2021, the company generated revenue of £696 million.

GXO believe the acquisition of Clipper Logistics represents a “compelling strategic combination which significantly increases the opportunities for both businesses in the high-growth e-commerce/e-fulfilment areas, creating significant value for all stakeholders”.

The company also identified the following advantages of the deal:

Enhances GXO’s position as a successful, innovative and well-capitalised pure-play logistics leader;
Combines highly complementary service offerings, customer portfolios, and footprints in the UK and Europe, enabling significant cross selling of capabilities across a large combined customer base;
Brings together two natural partners with a very strong cultural fit; GXO is committed to protect and build on Clipper’s entrepreneurial approach for the benefit of both businesses and their employees and intends to safeguard the existing employment rights, including pension rights of Clipper employees;
Offers significant productivity opportunities, taking advantage of technology and infrastructure overlap in the joint enterprise;
Enables enhanced offerings by combining GXO’s complementary capabilities with Clipper’s, including its technology returns and repairs expertise, enabling GXO to strengthen its offering to an expanded universe of clients in the fast-growing e-commerce/e-fulfilment area;
Adds customers in the e-commerce/fulfilment space where GXO can leverage its existing platform to further diversify and expand its customer base;
Significant cost synergies based on procurement, and other operational overlap that can be realised within two years from transaction close;
Adds geographic presence in Germany and Poland as well as vertical presence in life sciences, which are key growth areas;
Enhances GXO’s ESG leadership position given Clipper’s reverse logistics and circular economy offerings and its robust internal targets to minimise carbon emissions and waste;
GXO believes the structure of the Possible Offer will allow GXO to maintain its investment grade credit rating.