Hays pays pounds 32m for German business

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The Independent Online
HAYS, the business services group, has made its second sortie into Continental Europe in just over a year with the purchase of a 75.1 per cent stake in Mordhorst, one of Germany's leading national contract distributors, for an initial pounds 32m, writes Terence Wilkinson. A maximum of pounds 34m is payable for the remaining shares.

In June of last year, in a similar deal, Hays established a foothold in Europe by acquiring Groupe FRIL, the French distribution company, for an initial outlay of pounds 37.5m.

'Any transport company, distributor or warehouse operator wanting to do business in the EC can only succeed if it can offer pan-European distribution,' Ronnie Frost, chairman of Hays, said.

'Among retailers, Tesco and J Sainsbury will move deeper into Europe and will want to take UK distributors with them. Food manufacturers also increasingly look at Europe as a single entity when choosing where to hold reserve stocks.'

Mordhorst employs 500 throughout Germany incluing two depots in the former East Germany. It specialises in multi-user warehousing, detailed order-picking and next-day delivery for manufacturers of car parts, agricultural chemicals, office products and wines and spirits.

Last year, by UK accounting conventions, Mordhorst made pre-tax profits of pounds 8.5m on sales of pounds 64.8m. Mr Frost said that the acquisition would enhance Hays's earnings by 5.5 per cent, helping Hays shares to rise 5p to 239p.

Hermann Rothert, managing director of Mordhorst for the past 10 years, holds the outstanding 24.9 per cent of the equity and will continue to manage the Mordhorst business. Hays has the option to buy out his stake subject to maximum payment of pounds 34m.

'Other UK distribution companies have gone into Europe by buying small companies and putting them together under an English manager. We wanted a national business and also felt that you can't have an Englishman running a sizeable operation in Europe,' Mr Frost said.

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