Tibbett & Britten Launches Bid to Acquire German Reverse Logistics Specialist

Tibbett & Britten Group plc has launched a bid to acquire a majority interest in the German reverse logistics specialist Vfw AG, based in Koln.

Tibbett & Britten has agreed to purchase the 27.5% stake held by the Chief Executive, Clemens Reif, and his family in the unlisted company, subject to acceptance of a general offer by at least a further 55% of the shareholders. The general offer opened on 4 September and will remain open until 7 October.

Vfw is a German market leader in reverse logistics, operating primarily in the retail pharmacy area, but with significant interests in the recycling of other consumer products and packaging. It is also a market leader in returnable containers, and has just been selected by Spar to supply systems and support to over 2500 retail outlets and 200 hypermarkets in Germany. In addition, it has a fledgling contract logistics operation that Tibbett & Britten and Vfw will develop jointly.

Vfw has a strong track record of profitability, with both revenue and profits growth over several years. For the 12 months ended 31 December 2002 it reported operating profits of €3.9m (£2.7m) on revenues of €29m (£20.7m). Net assets at the end of the year were €9.3m (£6.5m).

Assuming full acceptance of the offer and the achievement of earn-out targets, Tibbett & Britten will pay a maximum consideration of €31.7m (£22.2m). The acquisition will be funded from within the Group’s existing resources.

Operating on a fourth-party logistics (4PL) model, Vfw was created in 1991 as Vereinigung fur Wertstoffrecycling and controls the operations of some 500 sub-contractors across Germany. The company’s operations conform to legislative requirements and are independently assessed to demonstrate and maintain quality standards.

Vfw has specialist divisions covering the recycling of products and packaging for flowers, batteries, photographic supplies, consumer electronics, chemicals, medical goods, textiles/shoes, pharmaceuticals and gases, and it also handles consumer product recalls.

The business offers customers the opportunity to fully outsource their logistics requirements, including call centres, order processing, picking, despatch, etc. It has advanced IT systems enabling e-logistics services via a common database and deploys web-enabled technology to provide track-and-trace with customer interaction. Major customers include Toshiba, Henkel, Bayer, Compaq, Johnson & Johnson and Kodak, and it also works for 75% of pharmacies and 80% of hospitals throughout Germany.

Vfw will continue to be operated by the existing management team as a separate entity within Tibbett & Britten Group’s European operations, and will initially continue to use its own name. The Board expects the acquisition to be earnings enhancing in the first year.

John Harvey CBE, Tibbett & Britten’s Executive Chairman, said: “There are four major opportunities arising from the proposed acquisition of Vfw. Firstly, it allows us to further develop our core activities in Germany, complementing the existing Wal-Mart operations. Secondly it gives Vfw access to our international knowledge and customer base for them to grow their logistics business. Thirdly, reverse logistics is an area that we have already identified for future development, and Vfw brings huge experience of operating in the most regulated market in Europe for product recycling. And fourthly the acquisition enables us to translate Vfw’s reverse logistics expertise into other countries – particularly elsewhere in Europe where demand is growing as EU directives are being implemented and enforced.”