SingPost to hold EGM seeking approval for sale of its Australia logistics business
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SingPost expects to receive gross proceeds of approximately A$775.9 million and a profit of around S$289.5 million from the sale of Freight Management Holdings.
ST PHOTO: LIM YAOHUI
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SINGAPORE - Singapore Post will hold an extraordinary general meeting (EGM) seeking shareholders’ approval to sell its Australian logistics business.
The move, which values Freight Management Holdings (FMH) at A$1.02 billion (S$863 million), is expected to yield an anticipated special dividend and substantially improve the company’s financial position.
However, given that FMH is a major contributor to SingPost’s overall profits, a sale would also raise questions about the company’s long-term growth potential.
The EGM – where shareholders could vote for or against the sale of FMH – will be held in hybrid form at 3.30pm on March 13, SingPost said in documents filed with the Singapore Exchange on Feb 26.
SingPost expects to receive gross proceeds of approximately A$775.9 million and a profit of around S$289.5 million from the proposed sale of FMH.
The company intends to use the proceeds to repay A$362.1 million in debt taken to finance the acquisition of FMH.
A special dividend is also being considered, subject to the completion of the sale, SingPost said.
At a briefing on Feb 26, SingPost chairman Simon Israel said the board is recommending the divestment as the best option on two fronts: It not only unlocks the value of the Australian business, “but importantly, it (also) unlocks it a lot sooner than would be the case”.
On the return on investment from the proposed sale after accounting for the impact from debt, “we’re actually making a four times return on our investment”, Mr Israel noted.
He added that the board will need to determine the right balance for using the sale proceeds, considering how much debt to repay, how much to return to shareholders through a special dividend, and how much to retain for reinvestment.
The proposed sale of FMH, one of Australia’s top five logistics service providers by revenue, comes as a result of a strategic review of SingPost’s portfolio of businesses.
A three-year transformation plan as a result of the review was announced in March 2024 by former chief executive Vincent Phang, whose employment was terminated in December 2024 following investigations into a whistle-blower’s report alleging data falsification at SingPost’s international business.
The transformation plan had included a separate review of the options for FMH, resulting in the board determining that a full divestment of the asset is the best option to unlock value for SingPost and its shareholders.
Following completion of the disposal, SingPost will consist mainly of its Singapore and international businesses, and it will continue to be a postal and e-commerce logistics provider in the Asia-Pacific.
Mr Israel said: “While the sale will help resolve SingPost’s debt situation, it would require a reset of SingPost’s overall strategy.”
The board will consider the progressive divestment of non-core assets to pay down debt and create a pool of funds to reinvest, subject to its transformation plan.
Shares of SingPost closed at 57.5 cents, up 4.55 per cent.
