GXO Logistics Inc. is attempting a deal to buy high street retail provider Clipper Logistics PLC amid a hot market for supply chain acquisitions and investments.
Both companies’ boards have agreed to a possible cash and stock deal for Leeds-based Clipper totaling 920 pence ($12.53) a share, according to a statement released Sunday.
The pricing is 49 percent above Clipper’s closing share price in late January when GXO made its possible offer and is an 18 percent premium over the company’s closing price on Friday.
Any formal offer is subject to due diligence and securing of debt financing among other conditions, the statement said.
The offer, if accepted, would bridge two major logistics players in fashion and retail.
Clipper, which had a recent market cap of about $1.1 billion, specializes in e-commerce logistics and works with a raft of companies in the fashion space, including Asos, Giorgio Armani, River Island, PrettyLittleThing, Superdry, Liberty and John Lewis.
The bulk of Clipper’s business, 68 percent, in the six months ended Oct. 31 came from handling online fulfillment and returns. Its portfolio includes more than 11 million square feet of warehouse space.
Clipper reported revenue of 696 million pounds, or $946.2 million, for its fiscal year ended April 30.
The Clipper business would further expand GXO’s reach into European fashion e-commerce.
GXO, headquartered out of Greenwich, Conn., handles warehousing and distribution for companies such as Nike, Zara and H&M. The company, which had a recent market cap of $9.3 billion, has a portfolio of more than 900 warehouses totaling 195 million square feet.
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Sunday’s statement said the potential deal would “strengthen [GXO’s] offering to an expanded universe of clients in the fast-growing e-commerce/e-fulfillment area,” in addition to broadening its footprint to Germany and Poland, while also adding the life sciences vertical to its fold.
There’s also a green element there with GXO citing a deal would enhance its “ESG [environmental, social and governance] leadership position given Clipper’s reverse logistics and circular economy offerings and its robust internal targets to minimize carbon emissions and waste.”
GXO spun off from trucking company XPO Logistics last August and has been trading on the New York Stock Exchange for less than a year.
It continues to see rapid growth in lock step with companies’ ballooning e-commerce businesses and related return volumes.
GXO CEO Malcolm Wilson cited strong momentum in the business in a conference call with analysts this past week in announcing boosted guidance for the current year, with revenue expected to be up in the range of 8 percent to 12 percent. The company said it now expects earnings before interest, taxes, depreciation and amortization of $707 million to $742 million, up from the $705 million to $740 million range it had previously provided.
Wilson mentioned during the call contracts with Asos, Abercrombie & Fitch and Saks Fifth Avenue among recent customer wins or expanded deals.
Chief investment officer Mark Manduca touched on industry consolidation in that same earnings call, saying “technology and scale drive natural selection” within logistics.
“In the last couple of years, warehousing has been recognized as a critical piece of the value chain and the consumer experience,” Manduca said. “And, as a result, we are seeing more and more M&A in our space. Let’s be clear, we are very well positioned to play a role in the consolidation of our industry.”