Exclusive: Investor Gatemore pushes for break-up of logistics firm Wincanton

By Ben Martin

LONDON (Reuters) - Gatemore Capital Management has built a stake in Wincanton <WIN.L> and called on the British logistics company to break itself up by selling one of its two divisions, according to a letter sent by Gatemore to its own investors.

The asset management firm, which often pursues activist campaigns at companies where it has bought shares, said in the letter it had built a 2 percent stake in Wincanton.

Gatemore believes the company, which has a market capitalisation of about 284 million pounds, is "a sleeping giant whose intrinsic value is underestimated by the market," according to the investor letter seen by Reuters.

Wincanton traces its roots back to 1925, when it started as a milk distribution business, and has since grown into a haulage and warehousing company with a fleet of about 3,600 vehicles.

It is organised into two main divisions, a retail business that supplies grocers and general retailers, and a construction and transport business that handles industrial products such as bricks and fuel.

The firm's retirement scheme had a deficit of 69.3 million pounds at the end of September, a shortfall that a division sale would help to resolve, according to Gatemore.

"We have engaged in constructive discussions with Wincanton's management and, in private, are calling for the company to conduct a strategic review, sell one of its two divisions, fund the pension, and refocus the business," Liad Meidar, Gatemore's managing partner, wrote in the letter.

"In due course, we will discuss our ideas with other large shareholders and seek their support in promoting productive change in the company."

A spokesman for Wincanton said the company was aware of the letter and would respond directly to Gatemore. Wincanton shares were up 2.2 percent at 233 pence on Monday afternoon.

Gatemore is familiar with the British logistics market, having built a 24 percent stake in courier and logistics business DX Group <DXDX.L>, overhauled its board, and helped the firm with financing.

Its proposal for Wincanton comes amid a rise in activist investment in Britain, aimed at boosting returns for shareholders.

Recent campaigns include a push by U.S. hedge funds Elliott and Sachem Head for leisure company Whitbread <WTB.L> to split its Costa coffee shop chain from its Premier Inn hotels business, and an unsuccessful attempt by Sandell Asset Management to force supermarket giant Tesco <TSCO.L> to lift its takeover offer for wholesaler Booker.

(Reporting by Ben Martin; Editing by Mark Potter)