Marks and Spencer Group plc (M&S) has announced the acquisition of Gist Limited (Gist), the principal contract logistics provider to M&S Food, with the aim to “modernise its food supply chain network to support growth.”
The retailer will acquire the logistics firm from Storeshield Limited, a subsidiary of The BOC Group Limited, and the acquisition is expected to be EPS accretive in the next year.
Under the transaction, M&S is acquiring the entire share capital of Gist for an initial consideration of £145 million in cash. A further amount of £85 million 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 that 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 currently provides the majority of M&S Food logistics services via a network of eight primary and 10 secondary distribution centres located across the UK and the Republic of Ireland, including several freehold warehouses.
M&S claims that the acquisition will provide immediate cost benefits through the elimination of contractual fees and costs and the implementation of “aligned operational processes”.
Time to take action
Chief executive of M&S 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.”
