Disposal creates value and increases the focus
Wincanton (L:WIN) has announced the agreed disposal of Records Management for an excellent strategic price of £60m (£55.7m net). This will further reduce debt levels and strengthen the balance sheet while allowing the new management team to focus on the core logistics business. With debt now likely to be below the 2x EBITDA management target, we expect discussions about the resumption of dividends to be back on the board agenda.
Good price and limited synergies with core business
Records Management, we believe, is a very good business, reflected in its very high margins and excellent exit multiple of c 11x EV/FY15 EBITDA. However, the board’s desire to further reduce debt levels and give itself more strategic options led to the sensible decision to exit this business given the limited synergies and allow focus on the core logistics business and turnaround of Pullman.
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