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Marks & Spencer Group PLC on Thursday said it has bought Gist Ltd as part of its acceleration plan to transform its food supply chain.
The London-based food and clothing retailer has acquired Gist from Storeshield Ltd, a subsidiary BOC Group Ltd, which in turn is a part of Linde PLC.
M&S is buying Gist for an initial £145 million in cash and a further £85 million, plus interest, will be payable on the third anniversary of completion at the latest. Up to £25 million plus interest will also be payable ‘under certain conditions’.
Gist is the principle contract logistics business to M&S Food. It offers customers primary logistics from supplier to depot, and secondary logistics services from depot to store. It generated pro-forma earnings before interest, tax, depreciation and amortisation of £55 million in 2021.
The acquisition is expected to be accretive in M&S's earnings per share in the next year and accelerate its ‘multi-year plan to modernise its food supply chain network to support growth,’ it said.
‘The acquisition will generate immediate benefits to M&S through the elimination of contractual fees and costs and the implementation of aligned operational processes,’ M&S added.
Chief Executive Stuart Machin said: ‘M&S has been tied to a higher cost legacy contract, limiting both our incentive to invest and our growth. The last two years have shown what can be achieved by working collaboratively alongside our partners at Gist. This has given me confidence that now is the time to take action and remove an impediment to our growth. We have therefore acted decisively to acquire Gist, taking control of our Food supply chain for the first time in our history.’
Earlier on Thursday, M&S said Chief Financial Officer Eoin Tonge will leave for Primark-owner Associated British Foods PLC.
Tongue has been chief financial officer at M&S for the past two years. Back in May, he also picked up enhanced responsibilities as chief strategy officer following the departure of Chief Executive Officer Steve Rowe.
The London-based clothing, homeware and food retailer said it will kick off a search for a replacement. It added that Tonge will serve his notice period, which includes the firm's interim results in November.
Shares were down 1.9% at 140.65 pence each on Thursday morning in London.
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