P&O hopes to sell European logistics unit
Peninsular and Oriental Steam Navigation Company, the ports, shipping and logistics group, hopes to sell its Trans European logistics business.
Analysts said Trans European could fetch Pounds 135m-Pounds 150m, if valued on a par with rivals. This would put the business on 4.5 to 5 times earnings before interest, tax, depreciation and amortisation, which last year were Pounds 30m.
P&O is understood to have decided to sell the subsidiary after a strategic review concluded it was not big enough to compete with emerging global rivals.
However, the group is not marketing the sale actively, because of concerns that competition with other similar-sized logistics companies would depress the price.
Stinnes has been put up for sale by Eon, the German utility, and Christian Salvesen in the UK is seen as a potential takeover target.
If successful, the disposal would mark further progress towards streamlining the group, which has already demerged its cruise business and wants to exit bulk and container shipping.
P&O denied that it was selling Trans European. “We do from time to time review the group’s activities,” said an official. “We have got no plans to sell it at the moment.”
However, executives are said to be hoping an interested buyer will approach them. Alternatively, once other medium-sized targets have been taken out of the market, Trans European could fetch a better price.
Potential buyers include: big European post office groups; UPS and Federal Express, the US parcel carriers; and, possibly, shipping lines such as NOL, which are said to be keen to expand their logistics functions.
One person close to the company said: “In the right conditions they’d sell, but I don’t think they are making a big noise about it.”
In last year’s annual report, P&O described logistics and transport as its core functions. However the report on logistics by Sir Bruce MacPhail, managing director, focused strongly on the much better performing Cold Logistics division.
In the year to December, P&O Trans European made an operating profit of Pounds 15.7m on sales of more than Pounds 1bn and net operating assets of Pounds 204m. Cold Logistics made an operating profit of Pounds 18m on sales of Pounds 137m and net operating assets of Pounds 186m.
One banker said: “Somebody had a look round the portfolio, (to see) what’s not performing there overall. If they can find somebody who could pay a half decent price for it (they would sell).”
