Logistics company to sell parcel delivery firm

Logistics company Connect Group PLC has announced it is to sell courier firm Tuffnells in a £15m deal.

The Swindon-based distributor of newspapers, magazines, books and consumables has entered into a conditional share purchase agreement with Palm Bidco to dispose of The Big Green Parcel Holding Company Ltd and its subsidiaries, including Tuffnells Parcels Express.

In the financial year ended 31 August 2019, Tuffnells – which from a network of 36 depots and a head office in Sheffield serves approximately 4,000 businesses – reported an adjusted operating loss of £14.1 million on revenues of £164.4 million.

Gary Kennedy, Connect Group chairman, said: “After conducting a detailed strategic review, we have concluded that the sale of Tuffnells is the right option for the Group and in the best interests of all stakeholders.

Despite the trading difficulties in recent years, Tuffnells remains a leading player in its specialist field with every opportunity to thrive under new and committed ownership.

“Within the Group, its disposal will remove the distraction from our strong and profitable news and magazines distribution business, enabling further efficiencies as the Group resizes its central functions.

“Looking ahead, we remain focused on strengthening the Group’s balance sheet, while deploying our surplus free cash flow capital to deliver a reduction in net debt and maintaining attractive total shareholder returns.”

The coronavirus pandemic has hit both business hard: Smiths News said the sales volumes of newspapers it delivers to 24,000 retail outlets was down 25 percent following the government’s introduction of restrictions on social movement.

Trading in Tuffnells has followed a similar downward trend with a reduction of approximately 25 percent to 32 percent in volumes for the two weeks following the UK government’s announcement on March 23.