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[05 JAN 99] LYNX EXPRESS PRESS RELEASE
Lynx Express Acquires Red Star Parcels

Lynx Express has today announced the acquisition of Red Star Parcels creating the biggest independent express parcels operator in the UK.

The move adds over 150 sites and 550 employees to the Lynx organisation and increases the company’s annual sales to in excess of 170 million.

The acquisition is a coup for rapidly expanding Lynx Express which has substantially increased turnover and profits since the successful management buy-out of the company from the NFC in the Spring of 1997.

Managing Director Philip Rose commented:

"The acquisition of Red Star is a major step in our strategy to build Lynx express in the UK and internationally by both acquisition and organic growth. Red Star is an important acquisition for Lynx Express as part of our ongoing development programme and will be leveraging extensively off the synergies we can bring as a direct result of the organisation becoming part of the Lynx Group. We are very confident that the acquisition will be earnings enhancing for us in the first year."

The lynx Express chief said the services provided by both organisations are ‘very complementary’ particularly in the developing area of Lynx’s lightweight infrastructure for smaller parcels and consignments.

"Red Star is exactly what we have been looking for. It provides us with an additional revenue base of up to 25 million a year with substantial extra traffic which will be compatible to our development of a new sortation hub on an adjacent eight acre site in Nuneaton which is in addition to our existing 20,000 units per hour capacity.

"We had been looking in the marketplace and investigating likely potential targets for some time and have held discussions with other parties. Red Star was high on our shopping list of acquisition candidates but, by coincidence, call it fate, they approached us.

"We quickly discovered that in terms of an identikit fit with the profile of partner we had identified it was the ideal. The business accelerates the growth of our Sameday product and enhances the accessibility of our network by adding over 150 city centre locations. Due to the fact we had known many of the key personalities in Red Star for some time this also gave us confidence," he said.

The size of the deal is commercially confidential but Philip Rose confirmed that the sum agreed will not materially impact on Lynx Express borrowings and sufficient funds are available for expanding the business even further as new opportunities for growth arise.

"We feel it is symbolic that just over 18 months after the MBO the company has progressed to be in a position to carry out this acquisition at a time when we are enjoying increasing profitability," remarked Rose. "Our margin is a healthy five per cent on revenue and fast improving."

Red Star will continue to trade under its well known brand under the Lynx Express Group and remains as a separate legal entity.

The deal was completed from start to finish in under four months. Red Star had taken the decision in the Autumn to seek a partner having reached a point where substantial investment was required to take the company forward to the next stage of its development.

The Stevenage-based operation had turned the company around from a 10 million loss of four years ago towards projected profitability during the current financial year in which turnover will approach 25 million.

Lynx Express is today one of the major success stories in the UK and indeed European express industry. From annual losses of over 12 million five years ago, the business is clearly expanding with yearly revenue now over 145 million, almost 50 per cent up on turnover two years ago. With the Red Star acquisition, headcount will leap to approaching 4000 employees, complemented by a large number of owner drivers.

"We are clearly seeking to add value to all our customers by transferring best practice between the two businesses and I am sure there are lessons both organisations can learn from each other.

"We have a real opportunity to develop an exciting retail culture through Red Star’s unique capability of its Parcel Point network. We want to transform these established sites to realise their true potential to offer high service levels along the lines of leading High Street models.

"Customers increasingly want immediacy and accessibility. Through the addition of the Red Star network I believe we can be more tactile and user friendly than any other business in the industry could ever aspire to become.

"We believe the secret to success in the future is being close to your customers and we have always promoted this as a key element of our customer service philosophy. Now we have a geographic network second to none and one which will take us a quantum step forward," enthused Rose.

Rail, he said, is turning the corner with increasingly measurable operational, financial and environmental benefits to customers.

"Our timing could not be better as rail is fast becoming the attractive transportation proposition for the future and will progressively become more attractive as the private sector gets its act together and becomes more entrepreneurial.

"We are very anxious to develop good relationships with the Train Operating Companies and with Railtrack and we see them as a valuable strategic partner offering a number of mutual benefits.

"The whole culture and the ethos of the railway has changed – Railtrack and the TOC’s is pouring billions into investment in the rail infrastructure and it wants partners alongside it that have the same confidence to invest in the future.

"Environmentally rail is the transport medium for the future. We want to be part of that and we think we are uniquely positioned to go forward as a partner in the future success of rail," he said.

Rose, who is Chairman of Euro Express, a group of like-minded carriers from all the major European countries, revealed that Red Star’s international business would be merged into the successful pan-European organisation.

He further disclosed that a ground-breaking new market leading courier service would be unveiled by Lynx Express in February, encompassing the Red Star network.

"This is an eagerly awaited new service that is without doubt a significant step forward for the industry and will create a new force in the marketplace," said Rose.

Philip Rose added:

"The acquisition of Red Star by Lynx Express creates the largest express parcels operator in the UK not under the control of a major postal authority.

"The move is good for both businesses and both sets of customers who now become one. Red Star faces an exciting future under the Lynx Express banner and we can promise both existing and prospective customers even higher levels of service and accessibility than ever before.

"Lynx Express will continue to expand. This latest acquisition is a milestone in the company’s development strategy but it is by no means the final chapter."

John Holmes, Managing Director of Red Star Parcels commented:

"Lynx Express was the Red Star board’s unanimous choice of preferred partner to take the company forward to the next stage in its development.

"In the past three and a half years since the management buy-out, tremendous strides have been made by both management and staff at Red Star to create a commercially driven company that has a unique position in the industry.

"The future is very exciting for Red Star employees and customers. Lynx Express and Red Star share similar cultures and both parties are totally committed to our mutual success as partners in the future."

Further Information:
John Clarke at Century PR, Kings Chambers, Queens Road, Coventry CV1 3EH Tel: 0120228881

   

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CWN / Business / Newswire / Lynx Express / 5 Jan

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