Clipper expands further south with acquisition

CLIPPER LOGISTICS, the firm that distributes goods for retailers such as John Lewis, Marks & Spencer, Asda and Morrisons, has bought a warehousing and distribution services provider for just under £12m.

Tesam Distribution operates from three sites in and around Peterborough with more than 1.1m square feet of space and has shown consistent profit growth over recent years

It reported revenue of £19.6m in the year to June 30 and earnings before tax and interest of £1.8m. It was established in 1984 and employs 250 people.

Steve Parkin, executive chairman of Clipper, said: “Tesam is a successful and robustly profitable and cash generative business which we have known for some time. The acquisition, coupled with our planned investment in additional capacity, will enable us to offer existing and prospective customers of both Clipper and Tesam greater operational flexibility, and will provide further headroom for the delivery of our strong business pipeline.

“We welcome the employees and management team to the Clipper Group and look forward to continuing to build the breadth and depth of our services and customer base.”

The consideration is being funded in cash from Clipper’s existing cash and bank facilities. The gross consideration is £11.75m. The assets being acquired include £3.4m in cash and a freehold property which will be sold post-acquisition and is expected to realise £2.7m net.

Tesam was principally owned by managing director Stephen Smith who will become a consultant to the group. The other members of the management team will remain as full-time employees.

Clipper plans to increase capacity at Tesam’s key site through the installation of mezzanine floors and additional racking and handling capability. The acquisition will be immediately earnings-enhancing.

Analyst Greg Poulton at N+1 Singer said: “This is a strong acquisition which we consider to be at an attractive price given the earnings profile of Tesam.

“We remain very supportive of management, the strategy and the long term potential for the group.“