Stobart Group Ltd. (STOB), a U.K. provider of road, rail, air and sea freight services, rose in London trading as investors endorsed its plan to enter automobile logistics with the purchase of Autologic Holdings Plc.
Stobart climbed as much as 5.5 percent to 123.9 pence, the biggest intraday gain since May 24. The Warrington, England- based company said yesterday after the close of trading that it reached an agreement to buy Autologic, which delivers, refurbishes and stores vehicles for carmakers, dealers and rental firms.
“It’s a natural progression from their existing distribution business, and it is a good fit with the group,” said Peter Ashworth, an analyst at Charles Stanley Securities Ltd. He has a buy recommendation on Stobart. “There is scope to exploit the Stobart rail infrastructure in the car transportation sector.”
Stobart, which delivers cargo to U.K. supermarkets, sees opportunities to expand Autologic (ALG) in Europe, and the acquisition will result in cost savings from better use of its fleet, Chief Executive Officer Andrew Tinkler said in a statement. Autologic will benefit from Stobart’s buying power for new vehicles, maintenance, car parts and insurance, according to Stobart.
Stobart’s offer values Autologic at 12.4 million pounds ($19.4 million). Autologic shareholders will receive 20 pence in cash for each share, a 74 percent premium to the share price of the Northampton, England-based company on May 23, the day prior to the offer period.
Autologic, which transports BMWs to U.K. dealers and Minis produced in the U.K. to Southampton port, said May 24 that it was in talks with Stobart. The buyer will use existing cash for the purchase.
Autologic got about 80 percent of its 144.7 million pounds in revenue last year in the U.K., according to its annual report. It also has operating centers in Belgium, the Netherlands and the Czech Republic.
Stobart traded 2.6 percent higher at 120.6 pence as of 1:12 p.m. Autologic rose 2.6 percent to 19.75 pence.
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