Menzies Distribution has bought Gnewt Cargo for an undisclosed sum, saying the deal backs its diversification strategy and drives forward expansion plans for its parcel consolidation services across the UK and Ireland.
Gnewt was founded in 2008, providing final-mile delivery services in central London for retailers and parcel carriers such as Hermes and TNT, and last year carried out more than three million deliveries in the UK capital.
Menzies Distribution said it aims to offer Gnewt’s brand of environmentally-friendly distribution to existing customers who are increasingly interested in sustainable logistics support.
Greg Michael, managing director of Menzies Distribution, said: “Acquiring Gnewt was an exciting opportunity for us to advance our sustainability agenda whilst growing our neutral consolidation offer to the parcel market.
“Everyone recognises that goods need to be moved in and around congested city centres. The Gnewt model shows it can be done successfully whilst minimising environmental impacts.
“This acquisition gives us a stronger, cleaner presence in the London market, and with our national reach, gives us a platform to introduce all-electric distribution to other city centres in the UK.”
Menzies Distribution, which says it makes 300,000 deliveries a day to 25,000 individual destinations, covering an aggregate 135,000 miles, added that it has “substantially” invested in and diversified its operations beyond the traditional newspaper and magazine distribution market where sales have fallen, while it has made headway in e-commerce and logistics growth sectors in the last 18 months.
It also said it has reinforced its portfolio of retail logistics contracts, which include the three-year national contract for WH Smith’s national network of 1,200 stores, and a UK-wide contract with catering equipment supplier Nisbets.
In May, Menzies purchased Irish distributor EM News Distribution in a €3.6 million (£3.3m) buyout, amid plans to grow its logistics offering in Ireland.
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However, the group canned a planned £40m merger between its distribution arm and parcels business DX Group after a profit warning by the latter.
Costs related to the collapse of the deal led to John Menzies, which started out in Edinburgh in 1833, reporting a sharp drop in pre-tax profits for the six months to 30 June. They fell to £500,000, from £3m a year earlier, with earnings also taking a knock from costs associated with its recent purchase of US aviation services group ASIG.
Underlying operating profits in its distribution arm fell to £10.8m from £12m, but the group said its parcels operation “finished the period strongly”.
Menzies also said at the time that it continued to see merit in separating its aviation and distribution divisions at the “appropriate time”, amid investor pressure for such a move.