The board of Palletline is undertaking a strategic review of all options for investment in the business including a sale, as requested by current shareholder members, Motor Transport has learnt.
Potential buyers could include Amazon - a major customer of Palletline, which is currently the only pallet network to hold Amazon’s preferred carrier status for inbound deliveries.
Other likely contenders include major operators, aspiring to emulate Culina’s ownership of The Pallet Network, which was bought by Culina subsidiary Eddie Stobart in 2018 for £53m.
Venture capitalists are also likely bidders.
During the pandemic, Palletline, along with other pallet networks, saw volumes soar, aided by the resulting online shopping boom. According to the latest figures from the Association of Pallet Networks, the sector saw a 13.2% growth in 2021, delivering 31.5m pallets. However, all networks have struggled with the HGV driver shortage crisis.
Sources say the move to sell is being driven by those with the largest shareholdings, and who are keen to realise the value of their stake in the business.
However, Palletline told MT that its shareholder model does not allow for a small number of members to hold the majority of the decision-making power and that its shareholders are limited to voting rights of 5% per member.
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It is understood that in a meeting of members on 18 May, the board announced plans to raise hub costs by £1.50 per pallet, to boost the value of the network ahead of sale. The proposition caused uproar amongst some of the members, with many voicing their determined opposition to the move.
However, Palletline stated that it has the lowest hub rate in the industry and intends to maintain that position. However, it is experiencing significant growth and now is the right time to look at all avenues to ensure the company can invest and expand with the growth. Palletline plans to invest over £12m over the next 3 years in hub capacity and IT infrastructure projects.
Palletline, which was launched in 1992, currently delivers to over 29 European countries from 96 depots across the UK. It handles around five million pallets a day and has a combined fleet of over 6,000 vehicles, over 5 million sq ft of warehousing and over 12,000 staff.
The UK pallet sector has eight pallet networks - Pallet Track, Palletforce, Palletline, Palletways, the Pallet Network and the United Pallet Network and Fortec, which is owned by Pall-Ex.
Asked if Palletline was up for sale, Graham Leitch, Palletline group MD, told MT: “In 2021 Palletline enjoyed its best ever year, achieving a 19.4% increase in turnover. Volumes increased by over 17.6% from 17,000-20,000 and we hit the five million pallets mark for the first time.
“This success demonstrates the market potential and need for continued expansion to meet the ever changing market landscape.
“This year, celebrating its 30th anniversary, the business is looking to the future by exploring alternative investment options to provide a strong platform for growth to further reinforce Palletline's position as the UK’s leading freight distribution network.”