Xpediator, a leading provider of freight management services across the UK and Europe has announced that it intends to raise approximately £7 million (before expenses) by way of a placing of new ordinary shares of 5 pence each in the Company ("Placing Shares") ("Placing"), in order to support the acquisition of the entire issued share capital of Import Services Limited ("ISL") ("Acquisition"), a contract logistics and warehousing business based at the Port of Southampton.

The Placing Shares will be issued at 70p per share ("Placing Price"), a discount of approximately 1.5 per cent. to the average closing share price of 71.1p over the last 30 calendar days to 6 July 2018 and a discount of approximately 18.6 per cent. to the closing share price of 86.0p on 6 July 2018, being the last practicable date prior to the date of this announcement. 

Proposed Acquisition

Founded in 1984, ISL is a long-established contract logistics warehousing business with facilities located within the Port of Southampton. Focused on Third Party Logistics ("3PL") storage, handling and transportation, ISL has built a significant client base with a focus on clients who service the leading brands in the toy, leisure and sports sectors.

The total consideration payable for the Acquisition is up to £12.0m on a debt-free cash-free basis and comprises:

·     initial consideration payable on completion of the Acquisition of £9.0m  to be settled by the payment of £6.0m in cash and £3.0m by the issue of new Xpediator ordinary shares; and

·     further consideration of up to £3.0m in cash which is contingent on the future results of ISL and the value of Xpediator shares at 29 May 2020.

Acquisition highlights:

-      Complementary acquisition which will add approximately 40k sqm of warehousing, operational synergies and opportunities to cross sell current Group services, in particular, European freight forwarding

-      ISL generated  revenues of £21.7m and unaudited normalised profit before tax of £1.8m for the year ended 31 December 2017

-      Opportunity to combine the Group's existing Southampton facilities and activities with ISL creating long-term cost efficiencies

-      Positioned to benefit from any upturn in international trade as a result of Brexit alongside the Group's port based operations in Felixstowe including an opportunity to develop a further 20k sqm of warehousing inside the port

-      ISL's senior management shareholder team locked in for 2 years

-      Expected to be earnings enhancing in the first full year of ownership

Commenting on the Acquisition, Stephen Blyth Chief Executive, said: "ISL shares similar characteristics to our previous transactions in that it is a well- established, profitable business which is operating in complementary but sufficiently distinct areas to add to both Xpediator's profitability and service capabilities. ISL's position within the Port of Southampton, in particular, is a significant commercial advantage upon which the enlarged Group can expand.

"It is a natural fit with our business, as there is scope to combine our existing facilities in Southampton, expand our capabilities around port services and provides an opportunity to occupy a further 20k sqm of warehousing space in the future. The combination of these factors make us confident that ISL will be a strongly earnings accretive acquisition for the Group."

Commenting on the acquisition, John Eynon, Chief Executive of ISL said: "Over the last 34 years, ISL has grown to become a leading independent port-centric logistic company in the UK.  We are confident, as part of the Xpediator group, the business will continue to grow, providing a bright future for ISL's employees, clients and suppliers."