M&S buys main logistics services provider Gist
Marks and Spencer has announced the acquisition of its principal contract logistics provider, Gist, from BOG Group, for an initial £145m in cash.
The deal is expected to be accretive to earnings per share in the next year and accelerates M&S's multi-year plan to modernise its food supply chain network to support growth.
“"&S Food has restored an industry-leading position in volume growth over the past four years, developed bigger, better stores and entered new channels through the investment in Ocado Retail and through franchise partnerships, including over 2,500 Costa stores," the company said.
"However, there is a substantial opportunity to create a more efficient and effective supply chain through investment in the network to reduce the cost to serve, update legacy systems and improve automation."
Gist provides the majority of M&S Food logistics services via a network of eight primary and 10 secondary distribution centres across the UK and the Republic of Ireland, including a number of freehold warehouses.
The initial consideration for the deal is £145m in cash. A further £85m plus interest will be payable in cash from the proceeds of the intended onward disposal of freehold properties or, at the latest, on the third anniversary of completion, M&S said.
An additional profit share from the disposal proceeds of up to £25m plus interest will be payable under certain conditions.
Chief executive Stuart Machin said: "M&S has been tied to a higher cost legacy contract, limiting both our incentive to invest and our growth. The last two years have shown what can be achieved by working collaboratively alongside our partners at Gist. This has given me confidence that now is the time to take action and remove an impediment to our growth.
"We have therefore acted decisively to acquire Gist, taking control of our Food supply chain for the first time in our history. This is the first step in a multi-year plan which will transform the entire supply chain."