The retailer revealed it had purchased Gist, the logistics supplier from Storeshield, a subsidiary of The BOC Group.
M&S is acquiring the entire share capital of Gist for an initial consideration of £145m in cash. A further amount of £85m plus interest will be payable in cash from the proceeds of the intended onward disposal of freehold properties or, at the latest, on the third anniversary of completion.
Disposal proceeds
M&S said that an additional profit share from the disposal proceeds of up to £25m plus interest would be payable under certain conditions. But that it has the ability to retain the freehold properties should it wish to do so in which case the full amount of £110m plus interest will be payable.
Gist provides the majority of M&S Food logistics services via a network of eight primary and 10 secondary distribution centres located across the UK and the Republic of Ireland, including a number of freehold warehouses.
M&S said that there is a “substantial opportunity” to create a more efficient and effective supply chain through investment in the network to reduce the cost to serve, update legacy systems and improve automation.
Benefits
The retailer said the acquisition would generate immediate benefits to M&S through the elimination of contractual fees and costs and the implementation of aligned operational processes.
Stuart Machin, chief executive, at M&S said : "M&S has been tied to a higher cost legacy contract, limiting both our incentive to invest and our growth. The last two years have shown what can be achieved by working collaboratively alongside our partners at Gist.
"This has given me confidence that now is the time to take action and remove an impediment to our growth. We have therefore acted decisively to acquire Gist, taking control of our Food supply chain for the first time in our history. This is the first step in a multi-year plan which will transform the entire supply chain."
