Singapore Post (SingPost) has acquired Australian 4th party logistics service company Freight Management Holdings (FMH) for a consideration of A$85.0 million ($84.1 million).
SingPost’s wholly-owned subsidiary, SingPost Logistics Holdings, on Oct 16, entered into a conditional sale and purchase agreement with the existing shareholders of FMH to acquire a 38% equity interest in the Australian company. Upon completion of the acquisition, SingPost Logistics Holdings intends to set up a new holding company in Australia to hold its equity interest in FMH.
Under the agreement, the payment will be broken down into two tranches. The first tranche will see the payment of A$58.8 million, of which A$28.8 million for the acquisition of ordinary shares from “certain FMH existing shareholders”. The remaining A$30.0 million will go to FMH for the subscription of new shares to be issued by the company.
The issuance of new shares will bring SingPost’s entire stake in FMH to 28% of the enlarged issued share capital on completion of the subscription.
In the second tranche, SingPost will pay some A$26.2 million for 10% of FMH’s shares in its enlarged issued share capital.
The completion of the first tranche is subject to the fulfilment of certain conditions, including but not limited to obtaining regulatory approvals, such as approvals from the Foreign Investment Review Board of Australia.
The completion of the second tranche is expected to take place around 12 months after the completion of the first.
According to an SGX filing, the total consideration was arrived on a willing buyer, willing seller basis.
SingPost says the acquisition is “in line with” its group strategy to transform into a “leading ecommerce logistics solutions provider” which focuses on opportunities in the Asia Pacific region.
See also: SingPost to divest loss-making US subsidiaries amid strategic review
SingPost adds that there will be no “significant change” in its risk profile as a result of the acquisition.
Based on FMH’s unaudited financial statements for its financial year ended June 30, 2020, the company reported profit before tax of A$20.3 million.
Its net asset value and net tangible assets were approximately A$26.0 million and A$13.3 million respectively.
The latest valuation of FMH as at July 31, 2020, conducted by Pricewaterhouse Coopers Securities, values the company at between A$182 million and A$217 million.
Shares in SingPost closed 0.5 cent lower or 0.7% down at 67.5 cents on Oct 16.
