DART GROUP PLC ('Dart Group') ACQUISITION OF COOLCHAIN GROUP LIMITED ('Coolchain')
Dart Group has agreed, subject to shareholder approval, to purchase the
entire issued share capital of Coolchain from Credit Agricole Indosuez, the
French bank. The acquisition will be immediately earnings enhancing after the
amortisation of goodwill and financing costs.
Coolchain is the largest distributor of fresh produce from Kent to major
supermarkets' regional distribution centres throughout the UK. At present
Coolchain operates a fleet of 106 trucks and 122 temperature-controlled
trailers.
Coolchain's core business is similar to that of Dart Group's distribution
division, having secured important nationwide distribution contracts from the
South-East. Coolchain's operations can be integrated into Dart Group's
existing distribution network, thereby delivering more efficient utilisation
of the enlarged vehicle fleet and the provision of the most cost-effective
service for multiple retail customers. Coolchain is especially well
positioned in Kent to serve both local produce growers and those importers
whose products arrive via Dover Docks, the Channel Tunnel and the nearby
Sheerness deepwater terminal.
The directors of Dart Group believe that this acquisition will enable the
enlarged distribution division to achieve the critical mass and economies of
scale necessary to support ongoing investment in the business, particularly on
IT and other systems. They, therefore, believe that this acquisition will
secure the position of Dart Group's distribution division as the UK market
leader in the fresh produce distribution sector.
Consideration of £14.2m is payable in cash on completion, subject to an
adjustment based on the amount by which Coolchain's consolidated net assets at
completion differ from the amount of approximately £4.1m reported in its
latest audited accounts as at 1 May 1999. This net asset adjustment is
expected to increase the consideration by approximately £0.4m. Under the
terms of the acquisition agreement, Dart Group has also undertaken to procure
that Coolchain will repay any debt outstanding to Credit Agricole Indosuez at
completion, subject to a maximum of £2.2m.
In view of its size, this acquisition requires the approval of Dart Group's
shareholders. A circular giving details of the acquisition and information
about Coolchain and containing notice of an extraordinary general meeting to
approve the acquisition will be posted to shareholders in due course.
Reasons for the acquisition and information on Coolchain
In his Chairman's Statement for the year ended 31 March 1999, Philip Meeson
noted that Dart Group's distribution division had continued to attract
substantial new business. It was also indicated that the division was
actively seeking to strengthen its presence in key growing and importing areas
in order to develop its services. With its position in the East of England
firmly established through the development of the Group's distribution centre
in Spalding, Lincolnshire, and the newly-opened Portsmouth centre covering the
Solent areas of Hampshire and West Sussex, the South-East is the next
geographical region where Dart Group believes there is significant potential
for profitable expansion.
The acquisition of Coolchain will give the enlarged distribution network a
broader customer and geographical base. It will also strengthen customer
relationships, particularly those with the national supermarket chains with
whom the distribution division already works closely to create services
tailored to their particular needs.
Coolchain's audited accounts for the period ended 1 May 1999 showed an
operating profit of approximately £0.5m on turnover of over £26.8m. In that
period, Coolchain acquired new contracts to consolidate fresh produce from
Kent for two of the top four national supermarkets. Since that time Coolchain
has continued to win new business and to improve the efficiency of its
operations so that the real impact of the current level of business will be
seen in the current year's trading.
As well as meeting Dart Group's strategic aims, Coolchain closely matches the
distribution division's existing operating culture. The operational
management team that has been responsible for Coolchain's two operating sites
in Kent, at Teynham and Paddock Wood, will be working with Dart Group's
incoming distribution division management team to promote and expand the
interests of the enlarged division.
Contacts:
Philip Meeson, Chairman Tel: 01202 597676 Mobile: 0385 258666
Mike Forder, Group Finance Director Tel: 01202 597676 Mobile: 0421 865850
