Wincanton plc has announced that it has reached agreement with CEVA Logistics Rose Limited (“Bidco”), a wholly-owned subsidiary of CEVA Logistics S.A. ("CEVA"), itself a subsidiary of CMA CGM S.A. (“CMA CGM”), on the terms of a recommended cash offer for the entire issued and to be issued share capital of Wincanton.
The acquisition values the entire issued and to be issued share capital of Wincanton at c.£566.9m and values Wincanton at c.£764.9m on an enterprise value basis. This represents a premium of approximately 52% to the closing share price on 18 January and 82% to the volume-weighted average share price over the last twelve months.
Commenting on the Acquisition, Sir Martin Read CBE, Chairman of Wincanton, said:
"This offer for Wincanton from CMA CGM is testament to the strength of the business we have built, our strategy, our strong customer relationships and our excellent people. CMA CGM is a highly-experienced operator in the industry, and as Wincanton becomes part of this larger business, it will be able to capitalise on the significant growth opportunities ahead. In unanimously recommending this offer to shareholders, the directors believe it is in the interests of all the company's stakeholders. While we remain confident in the long-term prospects of Wincanton and the wider sector, we recognise that the strong performance of the company has not been reflected in the performance of its shares in recent years. We therefore believe this offer represents the best opportunity for shareholders to realise the value of their investment with greater certainty."
Commenting on the Acquisition, James Wroath, Chief Executive Office of Wincanton, said:
"I am incredibly proud of the progress we have made at Wincanton over the last four years, thanks to our great people and customers. We have strengthened our business and ensured that we are at the forefront of logistics innovation. Our work in automation and technology has been industry leading and has allowed us to take advantage of trends towards outsourcing and eCommerce while continuing to improve service for our long-term customers. This offer will enable Wincanton to continue and accelerate the progress that has been made, providing an excellent partner with the balance sheet strength that will allow the pursuit of both existing and new growth opportunities. CMA CGM's strong track record of investing in its people and its commitment to its customers means that we are confident this offer will deliver benefits for all of our stakeholders."
Commenting on the Acquisition, Rodolphe Saadé, Chairman of CMA CGM, said:
"I am very excited about the prospect of working with Wincanton's experienced leadership team and the power of the combination with our logistics arm, CEVA. As a leading and trusted supply chain partner for many well-known British and Irish brands, Wincanton perfectly aligns with the CMA CGM Group's ambition to further expand its presence in this strategic region. Wincanton's renowned expertise in designing supply chain solutions for customers in the retail, grocery, eCommerce, construction, infrastructure, energy and defence sectors would enable CEVA to further diversify its contract logistics customer base. Bringing together the two entities would strengthen the CMA CGM Group's footprint in the United Kingdom and Ireland, while also paving the way for new opportunities and more innovative product offerings. On behalf of our 155,000 staff members, I look forward to welcoming Wincanton's talented people within our Group."
Commenting on the Acquisition, Mathieu Friedberg, Chief Executive Officer of CEVA, said:
"Wincanton's commitment to their people drives their success in the UK contract logistics market. At CEVA, we accomplish our mission through the diverse, talented people we have working in the UK and around the world. The proven track record of both CEVA and Wincanton are largely thanks to our respective employees. In addition to the innovative logistics solutions that we could develop and offer together, we would be optimally positioned to answer even more supply chain challenges for our combined set of UK customers."
The Acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.
Under the terms of the Acquisition, each Wincanton Shareholder at the Scheme Record Time will be entitled to receive (for each Wincanton Share held) 450 pence in cash
The Acquisition values the entire issued and to be issued share capital of Wincanton at approximately £566.9 million on a fully diluted basis and values Wincanton at approximately £764.9 million on an enterprise value basis.
The Acquisition Price represents a premium of approximately:
- 52 per cent. to the Closing Price per Wincanton Share of 297 pence on the Latest Practicable Date;
- 48 per cent. to the volume-weighted average price per Wincanton Share of 305 pence over the thirty (30) Business Day period ended on the Latest Practicable Date;
- 60 per cent. to the volume-weighted average price per Wincanton Share of 282 pence over the ninety (90) Business Day period ended on the Latest Practicable Date; and
- 82 per cent. to the volume-weighted average price per Wincanton Share of 247 pence over the twelve-month period ended on the Latest Practicable Date.
The Acquisition implies an enterprise value multiple of approximately 6.8 times Wincanton's underlying EBITDA and 11.7 times Wincanton's underlying EBIT (in each case on an IFRS 16 basis) for the twelve-month period ended on 30 September 2023.
If any dividend and/or other distribution and/or other return of capital is declared, made, or paid or becomes payable in respect of Wincanton Shares on or after the Announcement Date and prior to the Effective Date, the Cash Consideration will be automatically reduced by an amount equal to the amount of such dividend and/or distribution and/or return of capital. Where the Cash Consideration is so reduced, any reference in this Announcement or in the Scheme Document to the Cash Consideration will automatically be deemed to be a reference to the Cash Consideration so reduced. In such circumstances, Wincanton Shareholders will be entitled to retain any such dividend, distribution or other return of capital declared or paid. Any automatic reduction of the Cash Consideration or other exercise by Bidco of its rights and/or obligations referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, not be regarded as constituting any revision or variation of the terms of the Acquisition or the Scheme.
Background to and reasons for the Acquisition
The intended Acquisition of Wincanton represents an attractive growth opportunity that is in line with CEVA's expansion strategy. It is a unique opportunity to expand CEVA's offering in the UK, and to acquire complementary grocery and consumer expertise.
CEVA strongly believes that a combination between Wincanton and CEVA will:
- further develop CEVA's offering in contract logistics in the UK and Ireland, with Wincanton acting as its key development and growth platform in these countries;
- build on Wincanton's proven expertise in partnering with prominent grocers and retailers in the UK to diversify CEVA's customer base;
- bring the support of a well-capitalized and entrepreneurial group, with the capability to offer end-to-end logistics solutions on a worldwide basis to both SMEs and major blue-chip clients, in order to support future growth as well as future innovation development; and
- deliver cost synergies, sharing best practices and making use of key talents from both sides.
The Wincanton Directors, who have been so advised by HSBC as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing their advice to the Wincanton Directors, HSBC have taken into account the commercial assessments of the Wincanton Directors. HSBC is providing independent financial advice to the Wincanton Directors for the purposes of Rule 3 of the Code.
Accordingly, the Wincanton Directors intend to recommend unanimously that Wincanton Shareholders vote (or procure the vote) in favour of the Scheme at the Court Meeting and the Resolution(s) to be proposed at the General Meeting.
Irrevocable undertakings and letters of intent
The Wincanton Directors who are interested in Wincanton Shares have irrevocably undertaken to vote (or to procure the vote) in favour of the Scheme at the Court Meeting and the Resolution(s) to be proposed at the General Meeting (or, in the event that the Acquisition is to be effected by way of a Takeover Offer, to accept (or procure the acceptance of) such Takeover Offer) in respect of their own beneficial holdings, amounting, in aggregate, to 134,218 Wincanton Shares and representing approximately 0.11 per cent. of the issued share capital of Wincanton as at the Latest Practicable Date.
Bidco has also received letters of intent from certain Wincanton Shareholders in respect of 8,683,231 Wincanton Shares, in aggregate, owned or controlled by them and representing approximately 6.97 per cent. of the issued share capital of Wincanton as at the Latest Practicable Date, stating their intentions to vote (or to procure the vote) in favour of the Scheme at the Court Meeting and the Resolution(s) to be proposed at the General Meeting (or, in the event that the Acquisition is to be effected by way of a Takeover Offer, to accept (or procure the acceptance of) such Takeover Offer).
In total, therefore, Bidco has procured irrevocable undertakings and letters of intent to vote (or to procure the vote) in favour of the Scheme at the Court Meeting and the Resolution(s) to be proposed at the General Meeting (or, in the event that the Acquisition is to be effected by way of a Takeover Offer, to accept (or procure the acceptance of) such Takeover Offer) in respect of, in aggregate, 8,817,449 Wincanton Shares, and representing approximately 7.08 per cent. of the issued share capital of Wincanton as at the Latest Practicable Date.
Background to and reasons for the recommendation
Wincanton is a leading supply chain partner for British business, and is a trusted partner to many of the UK's most recognisable brands and influential public bodies. The Wincanton Directors are proud of Wincanton's relentless emphasis on customers and of the deep customer partnerships it has built to date, as evidenced by the strength of relationships and ongoing momentum in terms of both new business and contract renewals. To have such customers and such good relationships with them is a testament to the value of Wincanton's business and its future prospects.
The Wincanton Directors continue to believe there are strong structural drivers underpinning future growth across Wincanton's business, including trends towards outsourcing and eCommerce penetration.
Wincanton is also at the forefront of logistics innovation in the UK and continues to develop its commercial strategy to significantly increase the value of its offering for customers.
While the Wincanton Board is highly confident in the long-term prospects of the business as an independent listed company, it has considered the attraction to Wincanton Shareholders of the Cash Consideration due under the terms of the Acquisition against the backdrop of near-term macroeconomic uncertainty.
Bidco's offer at the Acquisition Price of 450 pence per share followed the Wincanton Board having received and rejected several unsolicited proposals from CMA CGM over a period of a few weeks, given such proposals were not at a level the Wincanton Board felt adequately reflected the valuation of Wincanton and its future prospects. The Wincanton Board believes that the Acquisition Price is at a level that it can unanimously recommend to Wincanton Shareholders.
In evaluating the financial terms of the Acquisition, and determining whether the Wincanton Board should recommend CEVA's proposal to Wincanton Shareholders, the Wincanton Board has considered a number of factors, taking into account:
- the Acquisition Price represents a significant premium to both recent and long-term trading levels of Wincanton Shares (as described above);
- the Acquisition implies an enterprise value multiple of approximately 6.8 times Wincanton's underlying EBITDA and 11.7 times Wincanton's underlying EBIT (in each case on an IFRS 16 basis) for the twelve-month period ended on 30 September 2023, being at an attractive level when compared to other public comparable transactions in the logistics sector;
- the all-cash consideration being offered pursuant to the Acquisition, which provides Wincanton Shareholders with the opportunity to realise the value of their investment for all of their Wincanton Shares upon completion of the Acquisition;
- the limited liquidity of Wincanton Shares presents a challenge for Wincanton Shareholders to otherwise monetise their holdings;
- Wincanton's consistently strong trading performance has not, in the view of the Wincanton Board, been fully reflected in the price of Wincanton Shares for a material period of time;
- the certainty of the Cash Consideration under the Acquisition should be weighed against the inherent uncertainty of realising the value that exists in the business in the future, given a near-term uncertain macroeconomic climate both in the UK and globally, and the competitive landscape in both warehousing and transportation; and
- shareholders, representing in aggregate approximately 6.97 per cent of Wincanton's issued share capital, having provided letters of intent to vote in favour of the Acquisition at the Court Meeting and General Meeting (or, if the Acquisition is implemented by way of an offer, to accept such offer).
In addition to the financial terms of the Acquisition, in its evaluation of CEVA as a suitable owner of Wincanton, the Wincanton Board has taken into account CEVA's support and intentions for the business and its employees.
The Wincanton Board believes the Acquisition represents a valuable opportunity which will provide a positive outcome for all its stakeholders, including employees, pension-right holders and customers, as well as Wincanton Shareholders.
The Wincanton Board notes the importance CEVA attaches to Wincanton's customer relationships and the high regard in which CEVA holds the strength of the customer partnerships Wincanton has built to date, and will endeavour to provide continuity for Wincanton's customers.
The Wincanton Board takes comfort in CEVA's track-record and commitment to recognising the importance of investment in technology and customer service, and look forward to working with CEVA to implement such technologies and customer services across the Combined Group.
Accordingly, following careful consideration of the above factors, the Wincanton Directors are pleased to confirm their intention to recommend unanimously that Wincanton Shareholders vote in favour of the Acquisition at the Court Meeting and in favour of the Resolution(s) to be proposed at the General Meeting (or, in the event the Acquisition is implemented by way of an offer, to accept or procure acceptance of such offer), as the Wincanton Directors have irrevocably undertaken to do in respect of their own Wincanton Shares.
Information on Wincanton
Wincanton is listed on the premium segment of the Main Market of the London Stock Exchange. Wincanton is a leading British supply chain solutions company. The Wincanton Group provides business critical services including storage, handling and distribution; high volume eFulfilment; retailer 'dark stores'; two-person home delivery; fleet and transport management; and network optimisation for many of the UK's best-known companies.
The Wincanton Group is active across a range of markets including food and consumer goods; retail and manufacturing; eCommerce; the public sector; major infrastructure; building materials; fuel; and defence. With almost 100 years' heritage, Wincanton's approximately 20,300-strong team operates from more than 170 sites across the country, responsible for approximately 8,500 vehicles.
Information on Bidco, CEVA and CMA CGM
Bidco is a newly established company formed by a subsidiary of CEVA for the purposes of the Acquisition. It has not traded prior to the Announcement Date nor has it entered into any obligations other than in connection with the Acquisition.
CEVA is a world leader in third-party logistics, providing global supply chain solutions to connect people, products and providers all around the world. CEVA is part of the CMA CGM Group, CMA CGM being a global player in sea, land, air and logistics solutions, serving more than 420 ports around the world across five continents, with a fleet of around 620 vessels. CMA CGM is a provider of container shipping services around the world, a key member of the Ocean Alliance and a global port operator.
Headquartered in Marseille, France, CEVA offers a broad range of end-to-end, customised solutions in Contract Logistics, Air, Ocean, Ground and Finished Vehicle Logistics in 170 countries worldwide thanks to its approximately 110,000 employees at more than 1,300 facilities. CEVA operates nearly 900 contract logistics and freight warehouses, representing 10.3 million square meters, and transports approximately 520,000 tons of air freight and 1.3 million TEUs of ocean freight.
CEVA serves customers from a wide range of industries including consumer & retail, automotive, industrial & aerospace, healthcare, e-commerce, technology and energy.
CEVA generates approximately US$15 billion of annual revenues.
In 2022, CMA CGM made several key acquisitions, including the commerce and lifecycle services activities of Ingram Micro to further strengthen CEVA's e-commerce logistics scale and capabilities in the U.S. and European markets; and GEFCO to add global finished vehicle logistics solutions as a complement to its automotive offering. This proven track record of successful acquisitions demonstrates CMA CGM and CEVA's ability to foster the growth of acquired companies by (i) providing them with additional capabilities and (ii) retaining their most talented people who benefit from additional opportunities.
Focus on CEVA's offering in the UK
CEVA generates circa US$950 million of annual revenues in the UK and covers the entire supply chain through several subsidiaries. In particular, the CEVA Group operates in:
- the contract logistics business, with annual revenues of circa US$500 million; and
- the ground and rail business, with annual revenues of circa US$290 million.
Structure, Conditions and Timetable
It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (although Bidco reserves the right to effect the Acquisition by way of a Takeover Offer (with the consent of the Panel and subject to the terms of the Co-operation Agreement)).
The Scheme Document, containing full information about the Scheme and the Acquisition, together with notices of the Court Meeting and the General Meeting and an indicative timetable for implementation of the Scheme, will be published as soon as reasonably practicable and, in any event (save with the consent of the Panel and Wincanton), within 28 days of this Announcement.
The Acquisition is conditional, amongst other things, on the following matters (set out in full in Appendix I along with certain other terms):
- the approval of the Scheme by a majority in number of the Wincanton Shareholders who are present and vote at the Court Meeting, either in person or by proxy, representing not less than 75 per cent. in value of the Scheme Shares voted;
- the approval by Wincanton Shareholders of the Resolution(s) required to implement the Scheme by the requisite majority of Wincanton Shareholders at the General Meeting;
- following the submission of a briefing paper, the CMA having indicated that it has no further questions and the CMA not having opened a merger investigation (or indicated that it intends to do so) at the time that the other Conditions have been satisfied or, if a merger investigation has been opened, the CMA having decided that no reference to a phase 2 investigation will be made;
- the receipt of approval from the Irish Competition and Consumer Protection Commission, without the authority having opened a phase 2 investigation;
- confirmation of no objection to the change of control of Risk Underwriting (Guernsey) Limited by the GFSC under the Guernsey Insurance Law;
- clearance in the United Kingdom under the NSI Act;
- satisfaction or, where applicable, waiver of the other Conditions (listed in Appendix I to this Announcement);
- the sanction of the Scheme by the Court; and
- the Scheme becoming Effective by no later than the Long Stop Date.
It is expected that the Court Meeting and the General Meeting will be held as soon as possible after the publication of the Scheme Document following the required notice period to convene the Meetings and, subject to the satisfaction or, where applicable, waiver of all relevant Conditions and the further terms set out in Appendix I and to be set out in the Scheme Document, the Scheme is expected to become Effective during 2024.
This summary should be read in conjunction with, and is subject to, the full text of this Announcement including the Appendices. The Acquisition will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix II contains the sources and bases of certain information and calculations contained in this Announcement. Appendix III contains details of the irrevocable undertakings and letters of intent procured by Bidco in relation to the Acquisition. Appendix IV contains definitions of certain expressions used in this summary and in this Announcement.