Exel expands with £40m Fujitsu Logistics deal
Tuesday 17 February 2004
Exel, the listed logistics company, yesterday agreed to buy the logistics operation of Japan's Fujitsu for an estimated £40m in a move that will triple the size of its operations in that country.
As part of the deal, which should be completed in the next few months, Fujitsu is expected to sign a three to four-year contract with Exel for ongoing logistics services in Japan. The unit, Fujitsu Logistics, employs just under 1,000 workers in Japan and provides a range of logistics services, such as product distribution, to Fujitsu companies in the country.
John Allan, Exel's chief executive, said: "This acquisition of FJL, with its combination of nationwide distribution and service centres, together with extensive road transport operations and a skilled workforce, will provide an excellent platform from which Exel can achieve the growth it is seeking in the region."
Analysts predicted the deal would add an extra £200m of turnover to the group a year, although they forecast that operating profits would be modest at about £5m.
Exel said the purchase meant it could offer "more extensive and higher value-added services". All of the unit's staff are expected to transfer to Exel as part of the transaction.
Analysts at Morgan Stanley pointed out that after three to four years, Fujitsu would, in theory, be able to put its logistics contract out for tender. "Exel will only be able to create value in our view if it is able to leverage the acquired infrastructure by serving other customers in the technology and electronics sector," they said.
They said the acquisition created "an interesting growth opportunity" but Exel would need to find other customers willing to follow Fujitsu's lead.
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