(Reuters) - Logistics company Wincanton Plc WIN.L has decided to drop plans to make an offer to buy rival Eddie Stobart Logistics ESLE.L, citing concerns about the target's financial performance and liquidity.
Wincanton had said last month it was considering a possible offer for Eddie Stobart, known for its green and red trucks. It had until Nov. 27 to make a firm offer or walk away.
“Wincanton will continue to explore acquisition opportunities to complement its organic growth but we owe it to our shareholders and other stakeholders not to take disproportionate risks in the development of the business,” Chairman Martin Read said.
Wincanton also said it was yet to receive full disclosure of information to complete due diligence, adding that there was still no visibility on when a review by Eddie Stobart’s auditor would be complete.
Eddie Stobart has had a turbulent year, with the departure of Chief Executive Officer Alex Laffey and suspension in trading of its stock in August after a financial review delayed half-year results.
On Monday, Eddie Stobart said it had granted Wincanton access to “extensive due diligence” since mid-September, including company information and multiple meetings with senior and divisional management.
“The board of Eddie Stobart is disappointed that Wincanton felt it was unable to put forward an offer to shareholders despite being granted access to extensive due diligence,” the company said.
DBAY Advisors, a major shareholder in Eddie Stobart, earlier this month had proposed to buy a controlling stake in the group.
Eddie Stobart said in its statement that the DBAY proposal, which includes buying a 51% stake and an investment of 55 million pounds ($70.57 million), was in the best interests of the company.
Reporting by Yadarisa Shabong and Indranil Sarkar in Bengaluru; Editing by Shinjini Ganguli and Jane Merriman
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