British retailer Marks and Spencer said it would acquire its key logistics services provider Gist Ltd for £145 million (€169.9 million) in an all-cash deal as it seeks to take control of its food supply chain.
The deal, which is expected to add to the company's profits next year, will help M&S navigate supply chain snags and optimise costs at a time inflation has been soaring.
"M&S has been tied to a higher cost legacy contract, limiting both our incentive to invest and our growth. We have therefore acted decisively to acquire Gist," chief executive officer Stuart Machin said.
The company has been looking to overhaul operations by improving product quality and investing in technology and e-commerce to restore its balance sheet.
Gist reported a proforma EBITDA of approximately £55 million in the year ended December 2021. A majority of its profit was generated from management fees recharged to M&S under contractual arrangements.
Gist is a contract logistics business that offers customers primary logistics (from supplier to depot) and secondary logistics services (from depot to store).
It has worked with M&S for decades as its principal customer, providing a majority of M&S Food logistics services under a long-term contract via a network of eight primary and 10 secondary distribution centres located across the UK and the Republic of Ireland.
M&S earlier in the day said its finance chief, Eoin Tonge, during whose term shares jumped 44%, will exit the company to join Primark-owner Associated British Foods.
Shares in M&S pared some early losses to trade down 2%.
News by Reuters, additional reporting by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.