Salvesen shares surge 26% as suitors jockey in bidding war

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The Independent Online

Shares in Christian Salvesen surged 26 per cent on the prospect of a bidding war yesterday after the logistics group revealed it had received takeover approaches from two parties.

The stock jumped 29 per cent earlier in the day, the highest single-day gain since May 2003, and closed 26 per cent ahead, or 13.25p, at 64.75p, giving the company a market value of around £171m. Its shares fell by 3 per cent in August after the company, which specialises in outsourced supply chain operations for manufacturing, consumer and food firms, warned that the wet summer would reduce the amount of vegetables it processed and delivered.

A number of potential bidders were put in the frame by analysts yesterday, including the German mail and logistics firm Deutsche Post and its UK rival Wincanton. Other likely candidates tipped as potential suitors include the French operator Norbert Dentressangle, which has said it wishes to grow through acquisitions, and Kuehne & Nagel.

Private equity firms are also likely to run a slide rule over the company. Douglas McNeill, an analyst with Blue Oar Securities, said: "Salvesen needs a period of painful restructuring but it has an undervalued property portfolio and strong cash flow. That combination has obviously turned heads and they may well turn out to be from the private-equity world."

The news of the approaches comes after the company sold off its vegetable processing unit to the Belgium firm Pinguin in August for £17.2m and promised to restructure its business to improve transportation earnings. The company wants to expand in shipping and storage of goods for food companies such as Danone.

Last month, Christian Salvesen said annual pre-tax profits fell by 19 per cent to £12.5m in the year to 31 March after it suffered from increasing competition. It also took a hit last year from start-up costs on distribution deals with the tyre makers Goodyear Dunlop and Continental. Its revenues jumped 10 per cent to £889m. The company, which has contracts with Tesco, Morrisons, Carrefour, Uni-lever and Marks & Spencer, to provide warehousing and distribution services, said it won new contracts worth £130m, up £10m from the previous year.

The Northampton-based company said there was no certainty an offer would be made. "The board is currently continuing discussions and will provide an update to shareholders in due course," it said in a statement to the Stock Exchange. "There can be no certainty that a formal offer for the company will be forthcoming, or as to the terms on which any offer might be made." The company added that the approaches were subject to a number of pre-conditions.

Christian Salvesen was set up in 1846 in Edinburgh by Theodore Salvesen, who was later joined by his brother Christian. The business started as shipping and forwarding agents, shipbrokers and timber merchants but experimented with transporting chilled and frozen food in the 1950s – its main business today.

It has 200 sites in the UK and Europe, including France, Spain, Ireland and Portugal, employing some 13,000 staff.

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