London, UK: Marks and Spencer will acquire its main logistics provider Gist from BOC Group subsidiary Storeshield for an initial sum of £145m in an all-cash deal.
A further £85m plus interest will be paid in cash from the proceeds of the planned sale of freehold property on the third anniversary of completion of the deal, M&S said in a statement.
The acquisition is the first step in a plan to transform the retailer’s food supply chain.
M&S said it can retain the freehold properties should it wish to do so. If it does, the full amount of £110m plus interest will be payable.
Gist provides the majority of M&S Food logistics services via eight primary and ten secondary distribution centres in the UK and Ireland.
The existing arrangement with Gist ties M&S to a higher cost legacy contract which expires in 2027, and the group said the acquisition will generate immediate benefits through the elimination of contractual fees and costs.
The acquisition also means M&S can take control of and invest in the network, building on the successful implementation of the ‘Vangarde’ supply chain optimisation programme.
“The last two years have shown what can be achieved by working collaboratively alongside our partners at Gist,” said Stuart Machin chief executive, Marks and Spencer.
“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.”
Gist had EBITDA of £55m in the year to end-December 2021, with the majority of profit reflecting management fees recharged to M&S under contractual arrangements, which will be eliminated upon consolidation to M&S.
Gist has around 5,800 employees. Its chief executive, Michael Chambers will continue to lead the business and report to the commercial director of M&S Food.
