Marks and Spencer buys Gist

The modest trend of retailers returning their logistics provision in-house moved forward a little, with British retailer, Marks and Spencer’s (M&S) purchase of Gist. Formerly called BOC Distribution Services and part of the wider Linde Group, it has contracts in continental Europe and the US, but its core customer for several decades has been Marks & Spencer. Indeed, it seems that most of its profits were earned with business from M&S.

Announced on the 21st July, the reasoning behind the move was described by M&S as a “multi-year plan to modernise its Food supply chain network to support growth”, however Stuart Machin, Chief Executive of M&S gave an interesting additional explanation, saying that “M&S has been tied to a higher cost legacy contract, limiting both our incentive to invest and our growth….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”.  

The finances around the deal are complex with BOC being paid UK£145m (US$175m) in cash with a further UK£85m from the sale of any property, although if all the property is retained M&S will pay a £110m. There is also a “profit share” of up to £25m. It was disclosed that Gist had an Earnings Before Interest, Depreciation and Amortisation (EBITDA) of £55m over the past year.

This purchase may be of just local interest, due as much the peculiarity of Marks & Spencer’s logistics contracts. However, it may also indicate that in a world of rapidly changing retailing patterns, retailers need logistics capabilities and expertise, something that has been implemented on a much more vast scale by Amazon. It would be a reversal of the concept of outsourcing. If so, this would represent a very significant change for the contract logistics sector, where the trend to outsourcing logistics was pioneered by British retailers such as Marks & Spencer.

Source: Transport Intelligence, 26th July 2022

Author: Thomas Cullen