FKI strengthens e-commerce link with pounds 228m American acquisition

FKI, THE engineering company, yesterday bolstered its evolution from metal-bashing to supplying the emerging Internet economy with the acquisition of a US sorting equipment firm.

The $368m (pounds 228.6m) cash purchase of Pinnacle Automation will be added to FKI's Logistex division, which provides supply chain solutions used by Internet retailers, postal services and other distributors to send out goods and letters. The acquisition takes the share of FKI turnover from Logistex to almost 30 per cent, on a pro-forma basis.

Michael Blogg, an analyst at Charterhouse Securities, said: "E-commerce businesses will need to invest in hardware and those that can provide this will do very well. FKI is moving in this direction and very quickly. The growth rates in this division [Logistex] will be way above its other businesses."

The Pinnacle move is the third acquisition FKI has made in the materials handling sector in 1999, taking its spend on this activity this year to pounds 447m. The company's shares rose 6.5p yesterday to 195p on the news.

However, the purchase almost doubles FKI's gearing to 160 per cent. Analysts said that the company's strong cash flow and sale of non-core businesses should bring this level of debt down.

Steven Jones, FKI's director of corporate planning, said that interest cover was not a problem, at over five times. He said that news on disposals was likely in the next three to six months.

He said: "We have found an area of e-commerce that we know something about. There is long-term growth in these businesses. It's bigger in the US right now but it will spread to Europe in the next three or four years."

In the nine months to 30 September, Pinnacle had turnover of $282.6m, with 28 per cent of sales directly to "dot.com" businesses. Operating income for the period jumped 65 per cent, compared to the equivalent period last year, to $25.2m.

Bob Beeston, chief executive of FKI, said: "We believe Logistex will now be able to offer an unrivalled breadth of expertise and experience in the market for logistics and sortation equipment, with pro-forma sales of some of pounds 460m."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
Rugby World Cup 2015: The tournament's forgotten XV

Forgotten XV of the rugby World Cup

Now the squads are out, Chris Hewett picks a side of stars who missed the cut
A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago