GXO Logistics has priced its cash offer for London-listed Logistics company Wincanton PLC (LSE:WIN, OTC:WNCNF) at £762 million, representing a 104% premium to Wincanton’s closing price on 18 January, when the offer period commenced.
The offer at 605p per share trounces a previous £605 million bid on 26 February from French group CEVA by 26%, and by 34% compared to CEVA’s original offer of £567 million.
In a statement, GXO said it has the support of 34% of Wincanton’s shareholders.
“The GXO board believes the combination with Wincanton would advance GXO's position as a global pure-play contract logistics leader by expanding its presence in a key market, enhancing its capabilities to better serve customers and drive long-term shareholder value creation,” said the group.
“The combination has compelling strategic and financial logic and represents an opportunity for GXO to capitalise on exciting, structural growth opportunities within the UK and Ireland.”
GXO’s latest offer suggests a £764 million enterprise value when taking into account Wincanton’s debt obligations.
Wincanton has yet to comment on the higher bid but had previously advised shareholders to consider CEVA’s cash offer instead.
The bidding war for Wincanton underscores the significant premium that acquisitive companies and private equity firms are willing to pay for undervalued UK companies.
British companies have flocked to the US stock market in recent years, where they can fetch more attractive prices on the Nasdaq or NYSE compared to the London Stock Exchange.
British tech giant Arm Holdings PLC (NASDAQ:ARM) famously snubbed the LSE for Nasdaq last year, where it was estimated to have received a premium upwards of 107% for its stock compared to a domestic listing.
The comparative cheapness of London-listed firms makes them prime targets for takeovers, willingly or not.
Commenting on today's announcement, Malcolm Wilson, chief executive of GXO, said: "Wincanton is a world-class business, and we have long been impressed by their high-quality people and diverse customer relationships across key industries.
“The combination of GXO's technological capabilities and global reach with Wincanton's proven expertise in the UK and Ireland markets will enhance our offering for the benefit of both companies' current and future customers.
“Our superior offer reflects our conviction in the value of this business and the opportunities the combined company will realise.”
GXO’s offer implies an enterprise value multiple of approximately seven times Wincanton's underlying EBITDA for the twelve-month period ended on 30 September 2023," GXO noted.