John Menzies buys Highlands parcels firm for £7.5m

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BAGGAGE handler and newspaper distributor John Menzies is moving into the fast-growing e-commerce market with the £7.5 million purchase of the biggest parcels delivery firm in the Highlands.

The cash deal will also trigger bumper payouts for the owners of Inverness-based AJG Parcels, which handles more than three million parcels a year.

Picture: Trevor Martin

Picture: Trevor Martin

Founded more than 20 years ago by majority shareholder and managing director Adrian Gray, the firm employs 140 staff and has hubs in Inverness and Linwood, Paisley.

Menzies said its 1,900-vehicle distribution arm traditionally delivers newspapers and magazines overnight on behalf of print media publishers, and the deal will enable it to “unlock the potential of the business in daylight hours”.

Forsyth Black, managing director of the division, said: “The purchase of AJG is an important step in our ongoing journey to build our newspaper and magazine distribution business.”

He added: “It is especially significant because it allows us to participate in the fast-growing market of parcel delivery and collection.”

It allows us to participate in the fast-growing market of parcel delivery

Forsyth Black

Along with its 10,000sq ft hub in Inverness, providing same-day delivery through the Highlands, AJG’s regional centre in Linwood gives it the ability to operate daily services to its bases in Dunoon, Fort William, Lochgilphead and Oban.

When he founded the business in 1992, Gray would deliver up to 20 parcels a day, using his own estate car.

It now runs a fleet of more than 100 vehicles, having secured a six-figure asset finance funding package from Clydesdale Bank last year to buy 30 Volkswagen vans from Hawco in Inverness.

According to Companies House records, Gray had a stake of 70 per cent in the firm, with operations director Fraser MacLean owning the rest.

Latest available accounts show that the business made a pre-tax profit of £1.65m in the year to the end of June 2014, on turnover of £8.75m.

A spokesman for Edinburgh-based Menzies said that AJG’s management team would be staying on in the wake of the takeover, and there were no plans for any job losses or site closures. Overall, the firm has a network of 13 satellite depots, providing a next-day delivery service to consumers in many areas including the Western Isles and Orkney.

Black said: “With our existing geographical reach, especially in harder-to-reach towns, the acquisition further underlines our appeal to companies seeking cost-efficient deliveries to the north and rural west of Scotland.

“We believe that, by acting as a neutral consolidator in these areas, we can offer a compelling partnership proposition to the UK’s major parcel carriers.”

In April, Menzies came under pressure to consider breaking itself up after Swiss investor Lakestreet Capital Partners, which has a 3 per cent stake in the group, argued it was “dramatically undervalued” and would be worth more if its aviation and distribution arms were valued on a standalone basis.

The company responded by saying it was “committed to maximising shareholder value and evaluates all options, including its corporate structure, on a regular basis”.

Following yesterday’s deal to buy AJG, Menzies chief executive Jeremy Stafford said more details about the group’s strategy for the distribution division – which delivered an operating profit of £24m in 2014 – will be revealed alongside half-year results, due for release on 18 August.