LONDON (Alliance News) - Connect Group PLC said Wednesday it has agreed to buy Tuffnells Parcels Express for GBP113.4 million and said it will launch a GBP55 million rights issue to partly fund the deal.
Connect, formerly Smiths News PLC, said it will pay a total of GBP113.4 million to buy Tufnells, a next-day business-to-business delivery service. The deal will be funded through existing debt facilities and by a GBP55 million rights issue.
The company priced the two-for-seven rights issue at 102 pence per share in order to raise GBP52.3 million, net of expenses.
Connect shares were up 0.4% to 169.50 pence on Wednesday.
"We are delighted to be announcing the acquisition of Tuffnells today, which we believe offers significant strategic and commercial opportunities for the enlarged group. The addition of Tuffnells will see us broaden our reach into an area of specialist distribution which complements our core skills and competences of time sensitive distribution with high levels of service and efficiency," said Mark Cashmore, chief executive of Connect.
"The transaction is expected to be significantly earnings enhancing for our shareholders and accelerates our clearly articulated diversification strategy. The group remains focused on growing profits and generating free cash flow to support our progressive dividend policy," Cashmore said.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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