Marks and Spencer to acquire Gist as part of “supply chain transformation”
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Marks and Spencer Group has announced the acquisition of Gist, who are currently the principal contract logistics provider to M&S Food. In a statement issued today, Marks and Spencer said the acquisition is expected to be EPS accretive in the next year. The retailer believes the acquisition of Gist will facilitate its plan to modernise its food supply chain network to support growth.
Under the terms of the transaction, M&S is acquiring the entire share capital of Gist for an initial consideration of £145m in cash. A further amount of £85m plus interest will be payable in cash from the proceeds of the intended onward disposal of freehold properties or, at the latest, on the third anniversary of completion.
Moreover, an additional profit share from the disposal proceeds of up to £25m plus interest will be payable under certain conditions. M&S says it has the ability to retain the freehold properties should it wish to do so, in which case the full amount of £110m plus interest will be payable.
“The Gist business being acquired generated a proforma EBITDA of c.£55m in the year ended December 2021, with the majority of profit reflecting management fees recharged to M&S under contractual arrangements, which will be eliminated upon consolidation to M&S. The transaction is expected to be earnings enhancing in its first full year and will be funded through existing cash reserves,” reads Marks and Spencer’s statement on the deal.
Marks and Spencer believe there is a “substantial opportunity” to create a “more efficient and effective supply chain” through investment in the network. This, it said, will “reduce the cost to serve, update legacy systems and improve automation.”
Gist currently provides the majority of M&S Food logistics services via a network of 8 primary and 10 secondary distribution centres located across the UK and the Republic of Ireland, including a number of freehold warehouses.
According to M&S, the acquisition will generate immediate benefits through the elimination of contractual fees and costs and the implementation of aligned operational processes. The acquisition also means M&S can take control of and invest in the network, thereby building on the implementation of its “Vangarde” supply chain optimisation programme.
Commenting on the deal, Stuart Machin, Chief Executive of M&S, said:
“M&S has been tied to a higher cost legacy contract, limiting both our incentive to invest and our growth. The last two years have shown what can be achieved by working collaboratively alongside our partners at Gist. This has given me confidence that now is the time to take action and remove an impediment to our growth. We have therefore acted decisively to acquire Gist, taking control of our Food supply chain for the first time in our history. This is the first step in a multi-year plan which will transform the entire supply chain.”
Just under a fortnight ago, it was also revealed that Gist’s operations in the Netherlands would be sold off. DLG, the Daily Logistics Group, has announced that as of August 28th, it will take over the logistics activities and the employees of GIST Nederland.
Writing on its LinkedIn page concerning the acquisition, Gist said:
“We are delighted with the news today that Gist is being acquired by Marks and Spencer. While the ownership of Gist will change, Gist will retain its identity and continue to operate as a separate business. We continue to work in partnership with all of our existing customers, delivering the same services and solutions as we do today.”