Dublin distribution firm changes hands in £40m transaction

Walsh Western Logistics, the Dublin-based distribution company, has been acquired by Exel Logistics for a maximum of just under £40 million. The main beneficiary will be Walsh Western's principal shareholder, Limerick man Mr Michael Enright (48), who owns over 90 per cent of the group. Mr Enright, who joined the group about 15 years ago, will receive about £9 million of the initial cash payment, as well as over £18 million of the additional future profits-related payments.

Exel, a subsidiary of the UK publicly-quoted transport group NFC, has made an initial cash payment of £9.5 million and has taken over borrowings and commitments of £9.4 million to acquire the operation, which is part of the Walsh Western Group.

In addition to the initial consideration of £18.9 million, the deal provides for additional payments of up to £20 million, to bring the total consideration to a possible £38.9 million. The additional payments will be related to the level of profits achieved over the next two years.

Walsh Western Logistics is based in the Western Business Park in Dublin. It is part of the Walsh Western Group which also includes road transportation and air freight businesses. The group employs 1,200 people in 16 locations including Dublin, Cork and Clare in Ireland and in the UK and Holland, Belgium, Germany and Russia. The private company has an annual turnover of about £55 million.

Mr Enright is to stay with the company as executive chairman and he retains his ownership of the group road transport and air freight businesses not being acquired by Exel.

Exel is acquiring the logistic business which involves supply chain management, value added manufacturing, duty management and transportation. It employs 500 staff in seven locations around Ireland, Scotland, England and Holland and had net assets at end December 1997 of £8.8 million.

In 1997 the company generated a turnover of £34.5 million and operating profits of £1.5 million. Rapid growth in the past year, including two new major contracts with Microsoft and 3Com, should push current year profits well ahead of the 1997 figure. Customers include Dell, Apple, Compaq, Novell, Hewlett-Packard, Celestica, Microsoft and 3Com in the computer sector as well as Cadbury, Neat Ideas, and Staples in the consumer and office products sector. Exel Logistics Walsh Western will "continue to work closely" with the two other Walsh Western companies providing integrated services to their joint customers. The deal is expected to generate new business for these companies.

In a statement Mr Enright said yesterday that he was "delighted that Walsh Western is entering a new phase of its development which will allow it to grow even more successful with the added resources that Exel Logistics brings. We have found Exel Logistics progressive approach to supply chain management to exactly fit our own method of operating and the new markets Exel will open up provide very exciting opportunities for our customer base."

Mr Frank McCarthy has been appointed managing director of Exel Logistics Walsh Western. Mr McCarthy was group operations director of the Walsh Western Group under chief executive Mr Enright. He said the operations of Exel and Walsh Western were complimentary with no overlap in the customer base.

Describing the acquisition as "a good fit", the managing director of Exel Logistics Electronics Europe Mr Martin Nye said no substantial changes are planned to the business. "We prefer to work with the established management of Walsh Western, bringing to bear our wider geographical reach, our financial strength and our experience from other sectors to provide the international integrated supply chain solutions that our customers are demanding". NFC group chief executive Mr Gerry Murphy - previously chief executive of Greencore - said the acquisition demonstrated his group's commitment "to building a leadership position in the European electronics logistics sector".

Ireland has become a significant manufacturing and distribution centre for major international electronics companies serving the European market, he said. The acquisition is aimed at significantly extending NFC's interests in the European electronics transportation market.

NFC operates mainly in the European and North American markets. It owns Exel in the electronics logistics market and Pickfords in the removal services market. The European operations of Exel Logistics employs 26,000 people in 400 locations and has a commercial fleet of 16,000 vehicles and warehouse capacity of 1.3 million square metres.