Singapore Post is looking to buy a 38 per cent stake in an Australian logistics firm for A$85 million (S$82 million) in cash.
It signed a conditional sale and purchase deal last Friday with shareholders of Freight Management Holdings (FMH) and a share subscription agreement for the purchase, SingPost said in a bourse filing yesterday.
When the acquisition is complete, SingPost unit Singapore Logistics Holdings will set up a new firm in Australia to hold its interest in FMH, which is based in the state of Victoria.
SingPost said the acquisition fits its strategy of "focusing on opportunities in the fast-growing Asia-Pacific region".
Besides being immediately earnings accretive, the deal will allow SingPost to further develop its business-to-business-to-consumer logistics capabilities in Australia and capitalise on the growing e-commerce segment there.
It will also allow the company to acquire a complementary technology platform and distribution management solution, SingPost noted.
FMH provides integrated supply chain and distribution solutions to more than 500 businesses across Australia.
It is an asset-light, technology-driven "control tower" business, SingPost noted, adding: "Utilising its technology, analytics and network, FMH is able to match customers' freight profile with the optimal carrier, increasing efficiency, utilisation and profitability for both customer and carrier."
Mr Damian Degenhardt, who founded FMH in 2000 and is its majority shareholder as well as managing director, will continue in his role after the acquisition is completed, SingPost said.
It also noted that FMH has a "long-standing business relationship" with it, having been a customer of CouriersPlease, a wholly owned SingPost unit, for many years.
FMH and its units recorded profit before tax of A$20.3 million for the 12 months to June 30.
FMH and its units recorded profit before tax of A$20.3 million for the 12 months to June 30. A valuation by PricewaterhouseCoopers Securities in Australia valued the firm at between A$182 million and A$217 million as at July 31.
A valuation by Pricewaterhouse-Coopers Securities in Australia valued the firm at between A$182 million and A$217 million as at July 31. The total purchase consideration of A$85 million will be paid in two tranches.
The first, estimated at A$58.8 million in cash, will consist of A$28.8 million for shares from existing investors and A$30 million for the subscription of new FMH shares to be issued.
That will give SingPost 28 per cent of the enlarged issued share capital of FMH once regulatory approvals have been granted.
The second tranche is expected to take place about 12 months after the first tranche.
An estimated A$26.2 million will be paid to buy FMH shares from certain investors representing 10 per cent of the firm's enlarged share capital.
SingPost shares closed up 2.2 per cent at 69 cents yesterday.
THE BUSINESS TIMES