M&S has announced its acquisition of Gist, its principal contract logistics provider for M&S Food, in a bit to accelerate the company’s multi-year plan to modernise its food supply chain network.
With an aim of creating a more efficient and effective supply chain, through investing in the network to reduce cost to serve, update legacy systems and improve automation, M&S is obtaining the entire share capital of Gist for an initial consideration of £145 million in cash.
The transaction is expected to be earnings enhancing in its first full year and will be funded through existing cash reserves.
The grocer’s food logistics services are provided by Gist mostly via a network of eight primary and 10 secondary distribution centres across the UK and the Republic of Ireland, as well as via a number of freehold warehouses.
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The current arrangement has a higher cost legacy contract which expires in 2027, seeing this acquisition benefiting M&S through the elimination of contractual fees and costs and the implementation of aligned operational processes.
M&S will also take control of and invest in the network, building on its Vangarde supply chain optimisation programme, which aims to reduce waste and improve customer experience.
“M&S has been tied to a higher cost legacy contract, limiting both our incentive to invest and our growth,” M&S chief executive, Stuart Machin said.
“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. This is the first step in a multi-year plan which will transform the entire supply chain.”
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