Wincanton will not make an offer to acquire Eddie Stobart Logistics, citing issues regarding the troubled 3PLs “financial performance and ongoing liquidity”.
It was revealed on 18 October that Wincaton had been performing due diligence on Eddie Stobart to “assess the merits of a potential combination”. It originally had until 27 November to make an offer or withdraw its interest.
Wincanton chairman Dr Martin Read said: “Wincanton will continue to explore acquisition opportunities to complement its organic growth but we owe it to our shareholders and other stakeholders not to take disproportionate risks in the development of the business.”
Wincanton said it had performed a “significant amount of work” in regard to the bid but had yet to receive full disclosure of the information requested to enable it to complete its due diligence exercise.
Furthermore, it said, there was “still no visibility on when Eddie Stobart’s auditor’s review may be complete”.
On 15 November Wincanton said Eddie Stobart owed it to all stakeholders to “prioritise urgent financial disclosure by its auditor to enable an informed decision on the value of any possible transaction”.
Eddie Stobart chief executive Sébastien Desreumaux has recommended a proposal from DouglasBay Capital (DBAY) for a conditional sale and purchase agreement of a 51 per cent stake in the company.
In a statement to the stock exchange today, Wincanton said that recent disclosures by Eddie Stobart had confirmed a material reduction in EBIT, poor cash collection and higher net debt.
Trading in Stobart shares were suspended in August when it warned that profit would “likely to be significantly lower than anticipated”. It saw the departure of former chief executive Alex Laffey.
Wincanton said of withdrawing its interest: “Even with the incremental synergies which would be available to a trade buyer such as Wincanton, the board cannot see how concerns with regards to Eddie Stobart’s financial performance and ongoing liquidity can be sufficiently overcome to enhance Wincanton’s shareholder value through a combination of the businesses.
“As a result, the board has decided that it would not be acting in the best interests of Wincanton shareholders to proceed with an offer for Eddie Stobart.”
