Christian Salvesen ends merger talks with rival TDG

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Christian Salvesen and the rival logistics operator TDG called off merger talks yesterday, after failing to agree a common strategy for a combined business.

Christian Salvesen and the rival logistics operator TDG called off merger talks yesterday, after failing to agree a common strategy for a combined business.

Salvesen said in a statement: "The very preliminary discussions [the board] has been having regarding a possible merger have now ceased."

Shares in the company fell more than 11 per cent during the day, before closing 5.6 per cent down at 59.5p. TDG shares fell nearly 3 per cent, before closing flat at 237p.

The logistics business in the UK has been under pressure from supermarkets and large retail chains, which have used their size to squeeze costs out of their contractors. The recent takeover of Tibbett & Britten by Exel has created a super-haulier in the market, which has forced other operators to find ways of increasing their scale.

Both TDG, which operates more in the industrial sector, and Salvesen, which works for retailers such as Somerfield and Marks & Spencer, have been struggling and a merger was viewed as a way of bulking up their operations to compete with Exel.

Earlier this month, shares in Christian Salvesen shot to a seven-month high on speculation of a merger, forcing it to confirm talks with TDG.

Salvesen sacked its chief executive, Edward Roderick, in May after a string of profits warnings, and there were fears in the City that TDG might uncover a black hole in its books.

Salvesen said it would soon announce the appointment of a new chief executive. It is still considered a takeover target, however. Alastair Gunn, an analyst at Arbuthnot Securities, said: "The group has a number of other potentially more attractive merger partners and we suspect having accepted the logic of increased scale, Salvesen management will soon find other parties coming forward."

Analysts now hope that TDG may return cash to shareholders, although it too is expected to remain a takeover target.

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