Christian Salvesen, one of the oldest names in Scottish business, is to disappear after it was announced yesterday the 135-year-old company will be bought by France's second-biggest haulage company, Groupe Norbert Dentressangle.
Salvesen, which has been a takeover target since it split from Aggreko almost 10 years ago, finally succumbed to an offer of 92p a share, valuing the firm at £254.4m.
The price is 79% above Salvesen's closing price on September 24, the day before the Edinburgh-based logistics company disclosed it was being stalked by two potential bidders.
On the news, Salvesen shares rocketed 44%, trading up 28.5p at 93.5p and reversing a 2.3% slide so far this year. However, the shares dropped back to close at 92p, up 41.5p.
The Dentressangle offer, which includes taking on Salvesen's £39m debt, has won acceptances from one-third of Salvesen's shareholders, including key family members, and a 10.1% block of shares managed by UBS Global Asset Management.
At close of play, the French company held 30.1% of Salvesen, with the Salvesen board recommending the deal to remaining investors. If a counter-bid emerges Salvesen would have to pay a 1% fee to Dentressangle to withdraw its recommendation.
Stewart Oades, Salvesen's chief executive, declined to identify the other interested company. However, he added that any higher offer would be given consideration. He said: "The offer from Dentressangle is a good one. The other party will have to determine whether they want to re-approach us. We'll just have to wait and see."
City speculation is on a number of private equity houses and Deutsche Post, the expanding German mail and logistics group which acquired another UK logistics group, Exel, in September 2005.
However, analysts seem to feel the French bid is a winner. Douglas McNeill, an analyst at Blue Oar Securities, said: "This is a stellar offer. Salvesen has clearly extracted maximum advantage from two competing approaches. It has solid cash flows, a reasonably well-known UK brand and will be more profitable if restructured properly. It's hard to see the other suitor topping this."
Dentressangle chief executive Jean-Claude Michel said he believed his bid was accepted because, "our two companies were both founded by strong families and we share a common heritage and a common culture, and that will help make the merger work.
"This transaction is a major step in the development of our group and our strategic plan to create a major player in the European market, which we view as having significant growth potential. Our customers want a service that will follow them all over Europe, and this merger will deliver the necessary geographic fit and allow us to significantly expand our service offering."
Asked if there would be any job losses among Salvesen's workforce of 13,000, Michel replied: "There will be some adjustments on the margins."
The takeover will increase Dentressangle's sales to 3.2bn (£2.2bn) and give it a fleet of 8000 trucks operating from 390 sites in 13 European countries. With Salvesen, comes customers including Tesco, British Airways, General Motors, Carrefour - Europe's biggest retailer - and Marks & Spencer. The deal will also add a cold-storage business to the French company's warehousing operations and allow it to benefit from Salvesen's expertise in frozen food distribution.
The geographic split will see the Salvesen side concentrating on the UK and the Iberian peninsula while Dentressangle will focus on France, Germany and eastern Europe. In all, the deal will deliver expected savings of 25m a year by 2010, and make Dentressangle Europe's third-largest logistics group.
Salvesen can trace its roots to a shipping and whaling business based in the port of Leith. It remains registered in Scotland but has been headquartered in Northampton since 1997, when it completed a controversial demerger from the Aggreko generator hire business.
The company was founded as a private company in Leith, in 1872, by Salve Christian Fredrik Salvesen, a Norwegian. He had first arrived in Scotland in 1851 to manage a Grangemouth shipbroking business owned by his brother, importing grain for domestic use and for distillation, and timber for pit-props, housebuilding, and for railway sleepers. Exports were mainly coal and iron. The firm also dealt in salt and Norwegian herring, and high profits were obtained from the flood of Australia-bound migrants and gold prospectors.
It branched out into whaling in the early 1900s, and through the years continued to diversify, into brickmaking, oil drilling and housebuilding activities. It pioneered the freezing of fish, leading to the fish finger market, and peas.
After floating on the stock exchange in 1986 it slimmed down to focus on transport and logistics. In recent years, the firm has been grappling with the consequences of consolidation among sector rivals.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article