(Sharecast News) - Clipper Logistics announced on Monday that it had agreed a recommended cash offer from GXO Logistics, with shareholders set to receive 690p and 0.0359 new GXO shares for each Clipper share.
The London-listed firm said based on the agreed value of a GXO share, the acquisition valued each Clipper Share at 920p, and its existing issued and to-be-issued share capital at £965m on a fully diluted basis.
Its board described the acquisition as a "compelling strategic combination", which would "significantly increase" the opportunities for both businesses in the high-growth e-commerce and e-fulfilment market.
Annualised EBIT run rate cost synergies of £36m before tax were expected, based on procurement and other operational overlap that could be realised by the end of the third year post-completion, the firms explained.
They also described "compelling" revenue synergies as a result of the "significant opportunity" to cross-sell capabilities across a large, combined customer base.
GXO said that while synergies were expected from combining operations and support functions as well as functional support areas, it expected overall headcount to increase long-term as part of ongoing efforts to grow its UK operations.
The company said it also expected the acquisition to be immediately enhancing to underlying earnings per share, excluding synergies, and on a pro-forma basis double-digit enhancing when including full run-rate cost synergies.
GXO said it had received irrevocable undertakings, including from Clipper executive chairman Steve Parkin and the other Clipper shareholder-directors, to vote in favour of the acquisition over 23,893,180 Clipper shares, representing 23.3% of its existing issued share capital.
It said those undertakings would remain binding in the event of a competing offer.
The directors of Clipper said they considered the terms of the acquisition to be "fair and reasonable", and so intended to recommend unanimously that shareholders vote in favour of the scheme.
"The offer from GXO presents a compelling opportunity for us to continue to grow our service offering, by partnering with a global, technology-driven logistics company," said Steve Parkin.
"We have accomplished so much, and I am confident the combination of our two companies means the best days are ahead.
"In recommending this offer to shareholders, the directors of Clipper believe it is in the best interests of all the company's stakeholders."
Parkin said the offer from GXO would give shareholders the opportunity to receive a "high portion of cash" at a "significant premium" to the prevailing share price, and a premium to the all-time closing high, while also benefiting in the potential future upside in the combined group through the element of share consideration.
"It will give Clipper an enhanced opportunity to develop its business as part of a larger global group with the resources to capitalise on attractive market opportunities."
At 1001 GMT, shares in Clipper Logistics were up 0.78% at 890.9p.
