Tag: Business Post

With its £9m acquisition of Weaver Pallet Express, parcels firm Business Post has shaken up the pallet industry. Dominic Perry looks at the implications.

Until very recently football club Chelsea was, relatively speaking, struggling. Although occasionally challenging for success, the team had not been among the big boys of the English football game for several years. It also lacked the financial clout to do anything about this situation, or pay its extensive debts.

Second division

Then suddenly all this changed. Following its takeover by a wealthy Russian multi-billionaire, money has become no object at the club and it has begun to invest heavily in a new team. It’s perhaps not too tenuous to draw an analogy between Chelsea’s revival and what has happened at Weaver Pallet Express.
The firm was considered by most analysts as the industry’s fourth-largest player in the pallet business. Although it posted a pre-tax profit in the year ending 31 March 2003 of £1.2m, it was always viewed as being in the ‘second division’ of pallet firms, someway behind the big three of Pall-Ex, Palletways and Palletline. Indeed, although most of its member firms said they were happy with Weaver, some had expressed worries that there was a lack of capital there to accelerate growth in order to compete with the big three. Then up steps a rich benefactor in the form of Business Post and suddenly all the problems appear to have vanished.

Business Post, already one of the leading players in the overnight parcels market, bought Lichtield-based Weaver two weeks ago for an initial payment of £9m plus a performance-related £35m due in March next year. The firm will be re-branded as UK Pallets and is due to re-launch in November this year.

Three-year plan

As Paul Carvell, chief executive at Business Post, explains, the purchase was part of its three-year plan: “We identified a number of sectors that had demonstrated high growth had and complementary customers, such as the technical courier industry. We had already invested in that with our purchase in February of BXT. The other area we identified was the pallet business which, as a sector, is growing like crazy at more than 30% per year and we thought we’d like to be a part of it?

Carvell says Business Post actively looked at all the pallet networks, and although he refuses to name names, he says this included the big three most likely Pall-Ex and Palletways simply because there is no member shareholder issue as is the case with Palletline. After a year of discussions with Weaver, it was chosen, he says, because “while it was number four, it was best placed for us to develop it and take it to number one in terms of quality With 3,000-5,000 pallets per night, it has enough critical mass to give us a core base to build on.”

It is also thought that Weaver was attractive because none of the partner companies own or have invested in the hub firm, making them effectively a network of independent hauliers, tied loosely to the hub. Business Post therefore needed to acquire only the hub to gain control.

The other key reason for buying into a successful network, says Carvell, is the opportunity for different divisions within the Business Post group to offer new services to its customers. He adds: “We have around 22,000 customers for our parcels service and obviously they have pallets that we don’t move at the moment. Equally, Weaver has customers that send parcels with other networks. We can now offer a comprehensive overnight solution.”

Equally enthusiastic about the takeover is Business Post’s commercial director, Guy Buswell. He comments: ‘We are now in the second year of our three-year strategy and this purchase makes a statement that, from our perspective, we see it as an opportunity.

“The market is growing in the pallet industry, which means we don’t have to try and take market share from our competitors; the parcels industry is such a mature market that you end up fighting with