Christian Salvesen faces takeover bid

UK logistics operator, Christian Salvesen has announced that it has received what it terms as ‘unsolicited interest’ from a financial buyer regarding a possible bid for the company. The buyer has not yet been named.

The announcement has followed a difficult year for the company which included a profit warning in February. Management warned that profits were likely to be 20% lower than expectations due in part to its poorly performing German operation. This has since been sold for a nominal fee to its management. The company also revealed that it was having problems in its core UK market which also prompted a re-structuring with the consumer and industrial divisions being merged.

This is not the first time that Salvesen has faced takeover bids – the company has been the target of two other acquisition attempts in the last seven years. In 1996 Hays attempted to buy Salvesen but its offer was controversially refused. In 2000 another bid was made, this time by a Swedish investment fund, AB Custos and a venture capital group, Doughty Hansen. The price offered at the time for the group was 200p – almost 3.5 times Salvesen’s share price on Wednesday before talk of a takeover bid took it 15% higher. However the management also rebuffed these approaches, believing that the price offered did not match the true value of the company.

AB Custos, the company behind the last bid, still holds 9.1% of Salvesen’s shares and at the time made it clear that it had put the management on notice that it must ‘deliver better value to shareholders in the near term.’ This left financial analysts clear that AB Custos would re-consider bidding should the share price and performance continued to deteriorate. However the fact that AB Custos has since then sold off part of its shareholding might suggest that there could be a third party buyer involved. Any prsospective bidder would still need to win over the Salvesen family which is believed to own around a third of the shares in the company.

Despite recent problems and a fall in the share price it should be noted that the company remains highly profitable compared with the rest of the UK contract logistics industry. Recent research to be published next week by Transport Intelligence has found that Christian Salvesen has the highest operating profits (EBIT) of the top ten largest logistics companies in the UK. However this may not be enough to prevent shareholders from accepting any offer which provides them with a substantial premium.

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