NFC boosted by prospect of Lynx sale
Tuesday 11 February 1997
NFC's shares advanced 7.5p to 164p on the news, but remain adrift of the 200p reached in recent months.
In a statement NFC said it would be several weeks before a contract was signed because NatWest was currently undertaking due diligence. A further announcement would be made when the current negotiations were concluded, NFC continued. The deal is expected to net NFC between pounds 30m-pounds 35m.
Lynx, which can deliver parcels overnight in Britain and continental Europe, had a net asset value of around pounds 25m and turnover of pounds 94m in the year to September, when it returned to profitability. It has had a chequered past with losses peaking at over pounds 12m in 1993.
Analysts welcomed the news of the planned disposal. "Lynx is in a fierce and competitive business and is barely making money but it is on the mend and should clear its net asset price," said Andrew Darke, transport analyst at brokers William de Broe. "Two years ago NFC could not give it away."
NFC, whose activities include Exel Logistics and Pickford transport group, has indicated for some time that Lynx was a non-core business, but management led by Gerry Murphy, who became chief executive in 1995, insisted it was in no rush to sell.
Link competes against the likes of UPS, Federal Express and Nightfreight in a highly fragmented UK market where margins are notoriously wafer-thin.
The decision to sell Lynx ends months of speculation about its future within NFC. It is also part of Mr Murphy's strategy to concentrate its UK logistics operations on larger and fewer contracts. Mr Murphy also plans to build revenues in North America and reorganise a series of national networks in Europe.
Mr Murphy and Sir Christopher Bland, the chairman, who also joined NFC two years ago, have presided over a wholesale clearout of directors as part of a pounds 50m restructuring programme.
After slumping to a pounds 39m profit in 1995, NFC recovered to make pounds 105m on sales of pounds 2.46bn in the year to September.
NFC is still left with a clutch of heavily loss-making businesses on the Continent after its ill-fated attempt to build a pan-European distribution system in the late-Eighties.
Sir Christopher recently ruled out selling the European businesses, saying divestment was not an option.
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